Paragas, Inc

question 103

Multiple Choice

Paragas, Inc., is considering the purchase of a machine that would cost $370,000 and would last for 8 years. At the end of 8 years, the machine would have a salvage value of $52,000. The machine would reduce labor and other costs by $96,000 per year. Additional working capital of $4,000 would be needed immediately. All of this working capital would be recovered at the end of the life of the machine. The company requires a minimum pretax return of 19% on all investment projects. (Ignore income taxes.) Use Exhibit 7B-1 and Exhibit 7B-2, to determine the appropriate discount factor(s) using the tables provided.
The combined present value of the working capital needed at the beginning of the project and the working capital released at the end of the project is closest to:

• A) $(3,004)
• B) $0
• C) $(12,080)
• D) $11,816

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Economic Profit

Total revenue minus total cost, including both explicit and implicit costs.

Barbershops

Establishments that provide hair cutting, grooming, and sometimes additional services primarily for men.

Discrimination

Unfair or prejudicial treatment of individuals based on characteristics such as race, gender, age, or sexual orientation.

Wage Differences

Variations in wages or salaries paid to individuals based on job type, industry, geographic location, or factors such as experience and education.