Whitton Corporation Uses a Discount Rate of 16

question 110

Multiple Choice

Whitton Corporation uses a discount rate of 16%. The company has an opportunity to buy a machine now for $18,000 that will yield cash inflows of $10,000 per year for each of the next three years. The machine would have no salvage value. The net present value of this machine is closest to (Ignore income taxes.) : Use Exhibit 7B-1 and Exhibit 7B-2, to determine the appropriate discount factor(s) using the tables provided.

• A) $22,460
• B) $4,460
• C) $(9,980)
• D) $12,000

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Definitions:

Local Subsidiaries

Companies that operate within a specific country or region under the ownership or control of a larger parent company, often tailoring operations to local market conditions.

Globally Standardized Products

Products that are manufactured in a uniform manner and are the same in all markets around the world to achieve economies of scale and branding consistency.

Global Integration

The process of designing and implementing strategies to operate efficiently and effectively across geographical borders and cultural differences.

Corporate Culture

The shared values, beliefs, ethics, and practices that characterize an organization and guide its employees.