Johnson Corp A)$125,910

question 131

Multiple Choice

Johnson Corp.has an 8% required rate of return.It's considering a project that would provide annual cost savings of $50,000 for 5 years.The most that Johnson would be willing to spend on this project is $\begin{array}{lll}& \text { Present Value } & \text { PV of an Annuity } \\\text { Year } & \text { of } 1 \text { at } 8 \% & \text { of } 1 \text { at } 8 \%\\1 & .926 & .926 \\2 & .857 & 1.783 \\3 & .794 & 2.577 \\4 & .735 & 3.312 \\5 & .681 & 3.993\end{array}$

• A)$125,910.
• B)$165,600.
• C)$199,650.
• D)$34,050.

---

Definitions:

Margins

The difference between the selling price of a good or service and its cost of production, often expressed as a percentage of the selling price, indicative of profitability.

Company Owned Store

A retail establishment directly controlled and operated by the corporation that owns the brand, as opposed to a franchise.

Manager

An individual responsible for controlling or administering all or part of a company or similar organization.

Sharing Contracts

Agreements that involve distribution of profits or losses among parties based on pre-determined criteria.