Figure 14-3

question 162

Multiple Choice

Figure 14-3.Davis Company is considering the purchase of a new piece of equipment that will cost $1,600,000 and have a life of five years with no expected salvage value. The expected cash flows associated with the project are as follows:

-Refer to Figure 14-3. What is the average annual income for this project?

• A) $900,000
• B) $1,500,000
• C) $600,000
• D) $700,000
• E) $300,000

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Definitions:

Elastic

Describes a situation in which the quantity demanded or supplied of a good or service significantly changes in response to a change in price.

Inelastic

Describes a situation where the demand or supply for a good or service is less responsive to changes in price.

Elastic Demand

A situation in economics where the demand for a product is sensitive to price changes, leading to a significant change in quantity demanded if the price increases or decreases.

Wage Increase

Refers to the rise in the hourly, daily, or monthly payments made to employees for their work or services.