Your Firm Needs a Machine Which Costs $20,000, and Requires

question 89

Multiple Choice

Your firm needs a machine which costs $20,000, and requires $1,000 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 9 percent. What is the depreciation tax shield for this project in year 3?

• A) $622.02
• B) $1,777.20
• C) $3,640.00
• D) $2,339.98

Comprehend the impact of technology on team dynamics and communication.

Acknowledge the principles of delivering and receiving constructive criticism.

Appreciate the importance of professionalism in phone and virtual communications.

Understand the significance of teamwork and group decision-making processes.

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Definitions:

Marginal Cost Curve

A visual chart demonstrating the change in cost for manufacturing an additional unit of a product as production levels rise.

Average Variable Cost Curve

A graphical representation that shows the relationship between a firm's average variable costs and its quantity of output.

Marginal Cost

The cost associated with producing an extra unit of output, crucial for decision-making in production and pricing strategies.

Total Costs

The complete amount of costs incurred by a business to produce a specific amount of goods or services, including fixed and variable costs.