Wiess Corp

question 17

Multiple Choice

Wiess Corp. is considering the purchase of a new machine. The machine will generate cost savings of $15,000 in year 1, $22,000 in year 2, and $32,000 in year 3. Wiess uses a discount rate of 10%. What is the most that Wiess would be willing to pay for the new machine? Ignore income taxes.

• A) $69,000
• B) $131,411
• C) $55,839
• D) None of the above

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Definitions:

Efficient Markets Hypothesis

A theory that suggests that financial markets are “informationally efficient,” meaning that asset prices always reflect all available information.

Actual Capital Markets

Real-world financial markets where savings and investments are transferred between suppliers who have capital and those who are in need of capital.

Statistical Measure

A quantitative representation that describes a characteristic of a data set or population, such as mean or standard deviation.

Pop-off Valve

A safety device designed to release excess pressure from a system, such as an air tank or steam boiler, to prevent over-pressurization and potential damage.