16. If a project has a net present value equal to zero, then:

A. a decrease in the project's initial cost will cause the project to have a negative NPV.

B. the project earns a zero rate of return.

C. the project's PI must also be equal to zero.

D. the project earns a return exactly equal to the discount rate.

17. Ford is considering a project to make a new brand of gas-saving car. In that project, the sales of the new brand will decrease the sales of existing brands of cars. This decrease in the sales of existing brands of cars is an example of:

A. negative side effect

B. fixed cost C. sunk cost D. opportunity cost

18. WestWoods purchased $598,650 of fixed assets that are classified as three-year property following MACRS depreciation schedule. The three-year MACRS depreciation rates are 0.3333, 0.4445, 0.1481, and 0.0741 for Years 1 to 4, respectively. What is the amount of the depreciation expense in Year 2?

A. $88,660

B. $149,663

C. $199,530

D. $266,100

E. None of the above

19. Millers Mechanics is evaluating a project that will increase annual sales by $485,000 and annual costs by $366,000. The project will initially require $3200,000 in fixed assets that will be depreciated straight-line to a zero book value over the 4-year life of the project. The applicable tax rate is 32 percent. What is the operating cash flow for this project?

A. $52,120

B. $39,000

C. $119,000

D. $106,520

E. None of the above

20. Which one of the following costs was incurred in the past and cannot be recouped? A. incremental B. opportunity C. erosion

D. sunk