Miles, Inc A)$23,958 Per Year

question 123

Multiple Choice

Miles, Inc.is considering the purchase of a new machine for $600,000 that has an estimated useful life of 5 years and no salvage value.The machine will generate net annual cash flows of $105,000.It is believed that the new machine will reduce downtime because of its reliability.Assume the discount rate is 8%.In order to make the project acceptable, the reduction in downtime must be worth $\begin{array}{rrr}& \text { Present Value } & \text { PV of an Annuity } \\\text { Year } & \text { of } 1 \text { at } 8 \% & \text { of } 1 \text { at } 8 \%\\1 & .926 & .926 \\2 & .857 & 1.783 \\3 & .794 & 2.577 \\4 & .735 & 3.312 \\5 & .681 & 3.993\end{array}$

• A)$23,958 per year.
• B)$49,662 per year.
• C)$18,264 per year.
• D)$45,263 per year.

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Definitions:

Controlled Drinking

A treatment approach for alcohol addiction which aims at moderating consumption rather than abstaining completely.

Licensed Professional Counselor

A mental health professional who has met the required educational, practicum, and licensure requirements to provide counseling services.

Alcohol Consumption

The act of drinking beverages containing ethanol, which can range from moderate intake to alcohol abuse.

Treatment Program

A structured plan of medical or psychological interventions designed to address a specific health concern or disease.