Locil Corporation Recently Purchased a New Machine for $307,890 with a Eight-Year

question 123

Multiple Choice

Locil Corporation recently purchased a new machine for $307,890 with a eight-year life. The old equipment has a remaining life of eight years and no disposal value at the time of replacement. Net cash flows will be $90,000 per year. What is the internal rate of return?

• A) 24%
• B) 29%
• C) 33%
• D) 37%

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Definitions:

Marginal Cost

This is the additional cost of producing one more unit of a good or service.

Multiple Suppliers

A sourcing strategy where a company uses various suppliers to mitigate risks and ensure a steady supply of products or components.

Bullwhip Effect

The increasing fluctuation in orders that often occurs as orders move through the supply chain.

Orders Decrease

A situation where the number of orders for products or services is reducing, potentially impacting company revenue and production planning.