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

question 17

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 net present value for this investment is:

• A) positive $150,000.
• B) negative $24,170.
• C) positive $24,170.
• D) negative $150,000.

Understand the global scale and impact of large firms and monopolies on economies and labor markets.

Understand the historical context of CEO compensation dynamics in the United States.

Gain proficiency in completing economic tables relating to output, prices, revenues, and costs.

Calculate optimal output levels for firms under different market structures.

---

Definitions:

Assignment

A process by which one party transfers rights, duties, or property to another.

Promissory Note

A financial instrument in which one party promises in writing to pay a determinate sum of money to another, either at a fixed or determinable future time or on demand of the payee.

Payee

A person to whom an instrument is made payable.

Maker's Obligation

The responsibility of the creator of a negotiable instrument to pay the specified amount to the holder of the instrument upon its presentation.