Your Firm Needs a Computerized Machine Tool Lathe That Costs

question 61

Multiple Choice

Your firm needs a computerized machine tool lathe that costs $50,000, requires $10,000 in installation, $5,000 in freight charges, and another $12,000 in maintenance for each year of its three-year life. After three years, this machine will be replaced. The machine falls into the MACRS three-year class life category. Assume a tax rate of 21 percent and a discount rate of 12 percent. If the lathe can be sold for $7,000 at the end of year 3, what is the after-tax salvage value?

• A) $6,499.35
• B) $6,541.47
• C) $5,999.45
• D) $4,816.50

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Definitions:

Sampling Error

The discrepancy between a sample statistic and its corresponding population parameter, arising purely by chance because the sample is not a perfect representation of the population.

Nondirectional Research Hypothesis

A hypothesis suggesting a correlation between variables without defining the nature of their interaction.

Generalizability

The extent to which the findings from a study can be applied to a wider population or different contexts.

Null Hypothesis

A statement that asserts there is no effect or no difference, and it is the hypothesis that researchers aim to test against.