Springer Company Is Considering the Purchase of a New Machine

question 18

Multiple Choice

Springer Company is considering the purchase of a new machine for £80,000. The machine would generate an annual cash flow before depreciation and taxes of £28,778 for five years. At the end of five years, the machine would have no salvage value. The company's cost of capital is 12 per cent. The company claims capital allowances based on straight-line depreciation and has a 40 per cent tax rate. What is the net present value for the machine?

• A)£5,318
• B)£-0-
• C)£85,318
• D)£23,744

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Definitions:

Erikson's Theory

A psychosocial developmental theory by Erik Erikson that outlines eight stages of human development, each characterized by a specific challenge or task.

Selman's Theory

A theory of social development that outlines how children progress through stages of perspective-taking ability, impacting social relationships and moral judgments.

Vocational Roles

Positions or careers that individuals engage in which are often aligned with their skills, interests, and professional training or education.

Technical Society

A society that emphasizes the role of technology and technical professions in its economic, social, and political operations.