The Management of California Corporation Is Considering the Purchase of a New

question 7

Multiple Choice

The management of California Corporation is considering the purchase of a new machine costing $400,000. The company's desired rate of return is 10%. The present value factors for $1 at compound interest of 10% for 1 through 5 years are 0.909, 0.826, 0.751, 0.683, and 0.621, respectively. In addition to the foregoing information, use the following data in determining the acceptability of this investment: The present value index for this investment is

• A) 0.88
• B) 1.45
• C) 1.14
• D) 0.70

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Definitions:

Demand Function

A mathematical formula that describes the relationship between the quantity of a good demanded and its price, along with other factors such as income and price of related goods.

Market Share

The percentage of total sales in a market captured by one company or product.

Perceived Market

This term suggests a market as understood or interpreted by individuals or businesses, which may not accurately reflect the actual market structure or dynamics. NO.

Demand Function

A mathematical formula that describes the relationship between the quantity of a good demanded and its various determinants like price, income, and prices of related goods.