The Production Department Is Proposing the Purchase of an Automatic

question 20

Multiple Choice

The production department is proposing the purchase of an automatic insertion machine. It has identified three machines and has asked the accountant to analyze them to determine which of the proposals (if any) meets or exceeds the company's policy of a minimum desired rate of return of 10% using the net present value method. Each of the assets has an estimated useful life of 10 years.The accountant has identified the following data:?Which of the investments are acceptable? $\begin{array}{|l|r|r|r|}\hline & \text { Machine A } & \text { Machine B } & \text { Machine C } \\\hline \begin{array}{r}\text { Present value of future cash flows } \\\text { computed using 10\% rate of return }\end{array} & \$ 305,000 & \$ 295,000 & \$ 300,000 \\\hline \text { Amount of initial investment } & 300,000 & 300,000 & 300,000 \\\hline\end{array}$

• A) Machines A and C
• B) Machines B and C
• C) Machine B only
• D) Machine A only

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Definitions:

Simple Diffusion

A process whereby molecules move from an area of higher concentration to one of lower concentration without the need for energy input.

Lipid-Soluble Substances

Compounds that can dissolve in fats and oils, allowing them to easily pass through cell membranes that are composed of lipid bilayers.

Lipid Bilayer

A thin polar membrane made of two layers of lipid molecules found in cell membranes, crucial for maintaining the structure and function of cells.

Polar Molecules

Molecules that have distinct regions of positive and negative charge, leading to an uneven distribution of electrons across the molecule.