A Company Decides to Exchange Its Old Machine and $77,000

question 184

Multiple Choice

A company decides to exchange its old machine and $77,000 cash for a new machine. The old machine has a book value of $63,000 and a fair market value of $70,000 on the date of the exchange. The cost of the new machine would be recorded at

• A) $140,000.
• B) $147,000.
• C) $133,000.
• D) cannot be determined.

---

Definitions:

Required Rate Of Return

The minimum return an investor expects to achieve by investing in a specific asset, considering the risk associated with the investment.

Dividends Per Share

The amount of dividends paid out to shareholders per share of a company's stock.

Growth In Dividends

The pace at which dividend distributions to shareholders by a company grow over a period.

Required Rate Of Return

This is the minimum return that investors expect or demand for an investment to be considered worthwhile.