Assume a Machine That Has a Useful Life of Only

question 30

Multiple Choice

Assume a machine that has a useful life of only one year costs $2,000.Assume, also, that net of such operating costs as power, taxes, and so forth, the additional revenue from the output of this machine is expected to be $2,300.If the firm finds it can borrow funds at an interest rate of 10 percent, the firm should

• A)not purchase the machine, because the expected rate of return exceeds the interest rate.
• B)not purchase the machine, because the interest rate exceeds the expected rate of return.
• C)purchase the machine because the expected rate of return exceeds the interest rate.
• D)purchase the machine because the interest rate exceeds the expected rate of return.

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Definitions:

Immediate Solutions

Quick and direct methods or answers to solve problems or address needs without delay.

Managed Care

A health care delivery system aimed at controlling costs, improving quality, and ensuring efficient use of resources.

Group Therapy

A form of psychotherapy where a small group of individuals meets regularly to discuss and explore their problems with the guidance of a therapist.

Interpersonal Skills

The abilities an individual uses to interact effectively with others, including communication, empathy, and conflict resolution.