Nance Company Is Considering Buying a Machine for $90,000 with an Estimated

question 68

Multiple Choice

Nance Company is considering buying a machine for $90,000 with an estimated life of ten years and no salvage value. The straight-line method of depreciation will be used. The machine is expected to generate net income of $3,000 each year. The cash payback on this investment is

• A) 15 years.
• B) 10 years.
• C) 7.5 years.
• D) 6 years.

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Definitions:

Ammonia

A compound of nitrogen and hydrogen with the formula NH3, commonly used as a fertilizer and in various industrial processes.

Urea

A nitrogenous compound produced in the liver as a waste product of protein metabolism.

Uric Acid

A waste product formed from the breakdown of purines, which are found in many foods, and is excreted in urine.

Nephridial Organs

Excretory organs found in many invertebrates, functioning similarly to kidneys in removing metabolic wastes from the organism’s body.