Newport Corp Is Considering the Purchase of a New Piece

question 55

Multiple Choice

Newport Corp is considering the purchase of a new piece of equipment.The cost savings from the equipment would result in an annual increase in cash flow of $200,000.The equipment will have an initial cost of $900,000 and have a 6 year life.There is no salvage value for the equipment.If the hurdle rate is 10%,what is the approximate net present value? Ignore income taxes.

• A)negative $28,940
• B)positive $28,940
• C)zero
• D)positive $300,000

---

Definitions:

Labor Demand

The total amount of workers that employers want to hire at a given wage rate and time.

Demand Curve

A graph showing the relationship between the price of a good or service and the quantity demanded at those prices, typically downward sloping.

Elastic Demand

A situation where the demand for a product or service significantly changes in response to a change in its price.

Substitutes Availability

The presence of alternative products or services that consumers can turn to when the price of a good increases or its quality decreases.