Home Express Moving Company Is Considering Purchasing New Equipment That

question 36

Multiple Choice

Home Express Moving Company is considering purchasing new equipment that costs $728,000.Its management estimates that the equipment will generate cash inflows as follows: $$\begin{array} { | r | r | } \hline \text { Year 1 } & \$ 214,000 \\\hline 2 & 214,000 \\\hline 3 & 264,000 \\\hline 4 & 264,000 \\\hline 5 & 150,000 \\\hline\end{array}$$ Present value of $1:
$$\begin{array} { | c | r | r | r | r | r | } \hline & 6 \% & 7 \% & 8 \% & 9 \% & 10 \% \\\hline 1 & 0.943 & 0.935 & 0.926 & 0.917 & 0.909 \\\hline 2 & 0.890 & 0.873 & 0.857 & 0.842 & 0.826 \\\hline 3 & 0.840 & 0.816 & 0.794 & 0.772 & 0.751 \\\hline 4 & 0.792 & 0.763 & 0.735 & 0.708 & 0.683 \\\hline 5 & 0.747 & 0.713 & 0.681 & 0.650 & 0.621 \\\hline\end{array}$$ The company's annual required rate of return is 9%.Using the factors in the table,calculate the present value of the cash flows.(Round all calculations to the nearest whole dollar.)

• A) $892,000
• B) $864,646
• C) $853,320
• D) $894,000

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Definitions:

Judging Types

Personality characteristics related to preference for structured and planned decision-making approaches.

Self-Concept

refers to the overarching understanding or awareness that individuals have of themselves, including their feelings, thoughts, and abilities.

Complexity

The state of having multiple interconnected parts, leading to difficulties in understanding, designing, or managing systems or products.

Consistency

The quality of always acting or behaving in the same way, adhering to the same standards, or producing the same results, enhancing reliability and predictability.