Laws Corporation Is Considering the Purchase of a Machine Costing

question 137

Multiple Choice

Laws Corporation is considering the purchase of a machine costing $16,000. Estimated cash savings from using the new machine are $4,120 per year. The machine will have no salvage value at the end of its useful life of six years and the required rate of return for Laws Corporation is 12%. The machine's internal rate of return 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) 12%
• B) 14%
• C) 16%
• D) 18%

---

Definitions:

Private Property

Owned assets or possessions that are legally recognized and protected, excluding those owned by government entities.

Freedom of Enterprise

The freedom for individuals to start and operate private businesses in search of profits with minimal government intervention.

Competition

The economic rivalry between companies or individuals for a larger share of a market, leading to better quality products and services at lower prices.

Competition

The rivalry among sellers trying to achieve such goals as increasing profits, market share, and sales volume by varying the elements of the marketing mix.