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Unformatted text preview: HW 5 Student: ___________________________________________________________________________ 1. Chester's purchased an asset for $36,200 last year that is classified as 3-year property for MACRS. What is the amount of the depreciation expense in year 2? A. $10,728 B. $12,409 C. $16,091 D. $17,586 2. A proposed project is expected to increase accounts receivable by $18,000, increase inventory by $9,000, and increase accounts payable by $8,000. What is the amount of the initial cash flow for net working capital? A. $1,000 B. $17,000 C. $21,000 D. $19,000 3. Which one of the following should be included in the initial cash flow for a project? A. sunk cost B. erosion effect C. salvage value D. opportunity cost 4. You are analyzing a proposed 5-year project that requires $89,000 in fixed assets that will be depreciated straight-line to zero over the life of the project. The fixed assets will be worthless at the end of the project. Fixed costs are expected to be $13,000 and variable costs are $2.62 per unit. The project requires project....
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- Winter '08