Nuff Folding Box Company, Inc

question 118

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 net present value of the project is__________

• A) $9,761
• B) $4,761
• C) $4,614
• D) $2,445

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Definitions:

Freedom of Movement

A concept often related to psychological and physical liberty, implying the ability to change one's position or travel freely.

Feelings of Inferiority

Emotions that arise from perceiving oneself as less capable or inferior to others, which according to Adler can motivate individuals to strive for superiority.

Behavior Potential

The likelihood of a particular behavior occurring, determined by the individual's history of reinforcement and the current environment.

Situational Factors

External circumstances or conditions that influence an individual's behavior or decisions at a given time, without being a reflection of inherent personality traits.