Almendarez Corporation Is Considering the Purchase of a Machine That

question 353

Multiple Choice

Almendarez Corporation is considering the purchase of a machine that would cost $320,000 and would last for 7 years. At the end of 7 years, the machine would have a salvage value of $51,000. By reducing labor and other operating costs, the machine would provide annual cost savings of $72,000. The company requires a minimum pretax return of 18% on all investment projects. (Ignore income taxes.) Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using the tables provided.The present value of the annual cost savings of $72,000 is closest to:

• A) $22,608
• B) $874,298
• C) $504,000
• D) $274,464

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Definitions:

WTO

World Trade Organization, an international body that regulates international trade between nations, aiming to ensure that trade flows smoothly and freely.

ILO

The International Labour Organization (ILO) is a United Nations agency that sets international labor standards and promotes rights at work, encouraging decent employment opportunities and enhancing social protection.

National Labor Relations Board

A federal agency in the United States tasked with enforcing US labor law in relation to collective bargaining and unfair labor practices.

Labor Standards

Regulations and practices that relate to working conditions, including aspects like minimum wages, working hours, safety, and rights to organize.