Machine a Is Bought for $200,000 and Has a Residual

question 2

Multiple Choice

Machine A is bought for $200,000 and has a residual value of $80,000 after six years of use. The amortization is straight-line and the annual profit before depreciation generated by the machine is $30,000. What is the ARR?

• A) 2.4%
• B) 4.3%
• C) 7.1%
• D) 16.7%
• E) 17.9%

---

Definitions:

Promising Option

An alternative or choice that shows potential for success or a favorable outcome based on early indicators or theoretical advantages.

Fortifying

The act of strengthening or reinforcing something to make it more secure or robust.

Trading Off

The act of giving up one benefit in order to gain another, often seen as a compromise.

Rationale

The underlying reasons or logical basis for a belief, action, or method.