General Studies · Capital Budgeting
Zola Co is evaluating a 3-year project. A feasibility study costing $15,000 was completed last month and remains unpaid. The project requires a machine purchased 2 years ago for $80,000; it can be sold now for $20,000, or used for 3 years and sold for $5,000. Half of an existing warehouse currently rented out for $10,000/year will be used, terminating the rental agreement. The project will be funded by an 8% bank loan. What is the total relevant cash flow at Year 0 for the NPV calculation?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1-$95,000
- 2-$80,000
- 3-$35,000
- 4-$20,000✓
Correct answer
-$20,000
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