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35. All else equal, an increase in which one of the following will increase the operating cash flow? 36. Tax shield refers to a reduction in taxes created by: 8-11
Chapter 08 - Making Capital Investment Decisions37. A project which is designed to improve the manufacturing efficiency of a firm but will generate no additional sales is referred to as a(n) _____ project. 38. Toni's Tools is comparing machines to determine which one to purchase. The machines sell for differing prices, have differing operating costs, differing machine lives, and will be replaced when worn out. These machines should be compared using: 39. The equivalent annual cost method is useful in determining: 8-12
Chapter 08 - Making Capital Investment Decisions40. Marshall's & Co. purchased a corner lot in Eglon City five years ago at a cost of $640,000.The lot was recently appraised at $810,000. At the time of the purchase, the company spent $50,000 to grade the lot and another $4,000 to build a small building on the lot to house a parking lot attendant who has overseen the use of the lot for daily commuter parking. The company now wants to build a new retail store on the site. The building cost is estimated at $1.2 million. What amount should be used as the initial cash flow for this building project?