Allen Co Invested in a Machine That Has a 3-Year Useful

question 62

Multiple Choice

Allen Co. invested in a machine that has a 3-year useful life. The company's discount rate is 12%, and the net present value of the investment is $(573) . Annual cost savings are: year 1 $3,000; year 2 $4,000; and year 3 $5,000. Determine the original cost of the machine. Ignore income taxes.

• A) $12,000
• B) $8,500
• C) $10,000
• D) $9,500

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Definitions:

Market Pressure

The influence on a company or industry resulting from changes in market conditions, such as customer demand, competition, or regulatory environment.

Globalization

The process by which businesses or other organizations develop international influence or start operating on an international scale.

American Companies

Businesses that are incorporated in the United States of America.

Information Overload

A condition in which individuals receive too much information in a way that complicates the ability to understand an issue or make decisions.