Butler Company Butler Company Is Considering an Investment in a Machine

question 119

Multiple Choice

Butler Company Butler Company is considering an investment in a machine that would reduce annual labor costs by $30,000.The machine has an expected life of 10 years with no salvage value.The machine would be depreciated according to the straight-line method over its useful life.The company's marginal tax rate is 30 percent.
Refer to Butler Company.Assume the company pays $250,000 for the machine.What is the expected internal rate of return on the machine? Present value tables or a financial calculator are required.

• A)between 8 and 9 percent
• B)between 3 and 4 percent
• C)between 17 and 18 percent
• D)less than 1 percent

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Definitions:

Drive Reduction Theory

A psychological theory that posits that motivation is rooted in the biological need to reduce internal drives, such as hunger or thirst, returning the organism to a state of homeostasis.

Circumplex Model

A model that describes human emotions as existing along two main dimensions: valence (positive to negative) and arousal (high to low).

Valence

In psychology, valence refers to the intrinsic attractiveness(good-ness) or averseness(bad-ness) of an event, object, or situation.

Arousal Level

Arousal level refers to the state of being awake and reactive to stimuli, involving physiological and psychological mechanisms that can vary from low to high intensity.