Use the Following to Answer Questions

question 64

Multiple Choice

Use the following to answer questions
Briarwood Enterprises is considering the purchase of some new equipment that will cost the company $151,800. The equipment is estimated to have a 6 year life and no salvage value. The equipment is expected to generate $34,000 of cash inflows each year over the life of the asset. Briarwood's cost of capital is 10%.
-Ignoring income taxes,Briarwood should:

• A)not purchase the equipment since the net-present-value is negative
• B)not purchase the equipment since the net-present-value is positive
• C)purchase the equipment since the net-present-value is negative
• D)purchase the equipment since the net-present-value is positive

---

Definitions:

Invisible Hand

A concept introduced by Adam Smith to describe how individuals’ self-interested actions can lead to positive social and economic outcomes for the community as a whole.

Self-Interest

An individual’s actions and decisions motivated by personal gain or benefit.

Public Interest

Denotes the well-being of the general public and the consideration of what is beneficial for society as a whole.

Economic Profits

Profits exceeding the opportunity costs of all inputs, indicating a return beyond the norm expected in the market or industry.