Dexter Smith & Co. is replacing a machine simply because it has worn out. The new machine will not affect either sales

The bid price always assumes which one of the following?    A.  A project has a one-year life. B.  The aftertax net income of the project is zero. C.  The net present value of the project is zero. D.  Any assets purchased will have a positive salvage value at the end of the project. E.  Assets will be depreciated based on MACRS. Refer to section 10.6

44.

Which one of the following would make a project unacceptable?    A.  cash inflow for net working capital at time zero B.  requiring fixed assets that would have no salvage value C.  an equivalent annual cost that exceeds that of an alternative project D.  lack of revenue generation E.  a depreciation tax shield that exceeds the value of the interest expense Refer to section 10.6

45.	Decreasing which one of the following will increase the acceptability of a project?    A.  sunk costs B.  salvage value C.  depreciation tax shield D.  equivalent annual cost E.  accounts payable requirement Refer to section 10.6

46.

Dexter Smith & Co. is replacing a machine simply because it has worn out. The new machine will not affect either sales or operating costs and will not have any salvage value at the end of its 5-year life. The firm has a 34 percent tax rate, uses straight-line depreciation over an asset's life, and has a positive net income. Given this, which one of the following statements is correct?    A.  As a project, the new machine has a net present value equal to minus one times the machine's purchase price. B.  The new machine will have a zero rate of return. C.  The new machine will generate positive operating cash flows, at least in the first few years of its life. D.  The new machine will create a cash outflow when the firm disposes of it at the end of its life. E.  The new machine creates erosion effects. Refer to section 10.5