Phoxco Is Considering Automating Its Production Line at a Cost

question 2

Multiple Choice

Phoxco is considering automating its production line at a cost of $40,000 to acquire the necessary equipment. The annual cost savings are expected to be $8,000 for 14 years. The firm requires a 20% rate of return. Ignore income taxes.
The net present value for this investment is:

• A) Positive
• B) Zero
• C) Negative
• D) Cannot be determined

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Definitions:

Skilled Employees

Workers who have acquired special abilities and knowledge through training or experience, enhancing their performance and productivity.

Production Rates

The speed at which goods are manufactured or services are provided in a specified period.

Global Labor Market

The international marketplace where labor demand and supply interact, affecting employment and wages worldwide.

Work Force

The total number of a country's or organization's employees, including both the employed and those seeking employment.