Newport Corp

question 111

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 8%, what is the approximate net present value? Ignore income taxes.

• A) $924,580
• B) $24,580
• C) $900,000
• D) $300,000

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Definitions:

Macroeconomics

The study of the economic behavior of entire economies, as measured, for example, by total production and employment.

Chinese Economy

The economy of China, characterized by its large size, rapid growth, and transition from a centrally planned economy to a more market-oriented system.

Rational Choice

Rational choice is a theory in economics that assumes individuals make decisions that provide them with the greatest benefit or satisfaction given the choices available.

Predetermined Goal

A specific objective or target set in advance that guides decision-making and strategy formulation.