A Firm Has a General-Purpose Machine, Which Has a Book

question 67

Multiple Choice

A firm has a general-purpose machine, which has a book value of $300,000 and is sold for
$500,000 in the market. If the tax rate is 35%, what is the opportunity cost of using the machine in a project?

• A) $500,000
• B) $430,000
• C) $300,000
• D) None of the above

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Definitions:

Excess Cash

The amount of cash available exceeding what is necessary for day-to-day operations, often allocated for investment or returned to shareholders.

Business Relationships

The connections and interactions between a company and its customers, suppliers, partners, and other entities essential for its operation.

Brokerage Fees

Charges levied by a broker for executing transactions or providing specialized services.

Common Stock

A type of security that signifies ownership in a corporation, entitling the holder to a claim on part of the company's profits and assets.