Ursula Company Is Considering the Purchase of a New Machine

question 5

Multiple Choice

Ursula Company is considering the purchase of a new machine for $160,000. The machine would generate an annual cash flow before depreciation and taxes of $62,588 for four years. At the end of four years, the machine would have no salvage value. The company's cost of capital is 12 percent. The company uses straight-line depreciation with no mid-year convention and has a 40 percent tax rate. What is the internal rate of return for the machine rounded to the nearest percent?

• A)below 12%
• B)between 16 and 18%
• C)between 14 and 16%
• D)between 12 and 14%

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Definitions:

Human Agency

The capacity for human beings to make choices and to impose those choices on the world, influencing outcomes in their lives.

Self-regard

An individual's perception, evaluation, and appreciation of oneself.

Intrinsic Motivation

The drive to engage in activities for their own sake, due to the inherent satisfaction or fulfillment derived from the activity itself, rather than for some external reward.

Extrinsic Motivation

Motivation driven by external rewards such as money, fame, grades, or praise rather than by intrinsic factors like personal satisfaction or enjoyment of the task itself.