1.National Geographic is replacing an old printing press with a new one. The old

Question

1.National Geographic is replacing an old printing press with a new one. The old press is being sold for $350,000 and it has a net book value of $75,000. Assume that National Geographic is in the 40% income tax bracket. How much will National Geographic net from the sale?

$315,000

$116,050

$240,000

$112,112

2. If a company decides that it needs to impose capital rationing, which statement is true?

The effect is positive if adverse   economic conditions exist.

The effect is negative because the   process involves rejecting a project with a positive net present value, which   in turn fails to maximize shareholders

$315,000

$116,050

Explanation / Answer

1.240,000

2.The effect is positive if adverse economic conditions exist.

3.Project 2

4.All of the above should be included.

5. True

6.False

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