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Rossiter Restaurants is analyzing a project that requires $180,000 of fixed assets. When the project ends, those assets are expected to have an aftertax salvage value of $45,000. How is the $45,000 salvage value handled when computing the net present value of the project? Select one: a. Not included in the net present value. b. Cash inflow prorated over the life of the project. c. Reduction in the cash outflow at time zero. d. Cash inflow for the year following

Rossiter Restaurants is analyzing a project that requires $180,000 of fixed assets. When the project ends, those assets are expected to have an aftertax salvage value of $45,000. How is the $45,000 salvage value handled when computing the net present value of the project? Select one: a. Not included in the net present value. b. Cash inflow prorated over the life of the project. c. Reduction in the cash outflow at time zero. d. Cash inflow for the year following

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter17: Long-term Investment Analysis
Section: Chapter Questions
Problem 1E: A firm has the opportunity to invest in a project having an initial outlay of $20,000. Net cash...
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Rossiter Restaurants is analyzing a project that requires $180,000 of fixed assets. When the project
ends, those assets are expected to have an aftertax salvage value of $45,000. How is the $45,000
salvage value handled when computing the net present value of the project?
Select one:
a. Not included in the net present value.
b. Cash inflow prorated over the life of the project.
c. Reduction in the cash outflow at time zero.
d. Cash inflow for the year following the final year of the project.
e. Cash inflow in the final year of the project. 

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