Nuff Folding Box Company, Inc

question 11

Multiple Choice

Nuff Folding Box Company, Inc. is considering purchasing a new glueing machine. The glueing machine costs $50,000 and requires installation costs of $2,500. This outlay would be partially offset by the sale of an existing gluer. The existing gluer originally cost $10,000 and is four years old. It is being depreciated using the Class 10 CCA rate of 30% and can currently be sold for $15,000. The existing gluer has a remaining useful life of five years. If held until year 5, the existing machine's market value would be zero. Over its five-year life, the new machine should reduce operating costs (excluding depreciation) by
$17,000 per year. The new machine will be depreciated using the Class 10 CCA rate of 30%. The firm has a 12 percent cost of
capital and a 40 percent tax on ordinary income and capital gains.
-The initial outlay for this project is __________

• A) $42,820
• B) $35,140
• C) $43,500
• D) $38,500

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Definitions:

Copyrights

Legal rights given to creators for the protection of their original work, preventing unauthorized use.

Corporate Values

The fundamental beliefs or guiding principles that dictate the behavior and action of a business or organization.

Competitive Behavior

Actions and strategies adopted by firms to outperform competitors and achieve market dominance.

Ethical Behavior

Conduct that is consistent with principles of moral integrity, respect, and fairness in professional and personal settings.