The Management of Retz Corporation Is Considering the Purchase of a New

question 62

Multiple Choice

The management of Retz Corporation is considering the purchase of a new machine costing $500,000.The company's desired rate of return is 10%.The present value factors for $1 at compound interest of 10% for 1 through 5 years are 0.909, 0.826, 0.751, 0.683, and 0.621, respectively.In addition to the foregoing information, use the following data in determining the acceptability in this situation:? $$\begin{array} { c c c } \text { Year } & \text { Income from Operations } & \text { Net Cash Flow } \\\hline 1 & \$ 100,000 & \$ 200,000 \\2 & 80,000 & 170,000 \\3 & 50,000 & 130,000 \\4 & 10,000 & 80,000 \\5 & 10,000 & 80,000\end{array}$$ ? The cash payback period for this investment is:

• A) 5 years.
• B) 3 years.
• C) 2 years.
• D) 4 years.

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Definitions:

Contradictory

Involving elements or statements that are in opposition and cannot both be true or accepted in the same context.

Role Overload

A state in which too many expectations or demands are placed on a person.

High Expectation

A strong belief that something will happen or be the case in the future, often greater than standard norms.

Downsizes

The act of reducing the number of workers in a company as a cost-saving measure or because of restructuring needs.