Topsider Inc

question 25

Multiple Choice

Topsider Inc. is evaluating whether to replace an existing leather-cutting machine with a new machine that has a five-year life. The old machine has current salvage value equal to $3,000; its salvage value in five years is expected to be zero. The net (after-tax) salvage value of the new machine in five years is expected to be $6,000. If the new machine is purchased, Topsider will have to invest $3,520 in its net working capital. Based on this information, what is the new machine's terminal cash?

• A)$6,000
• B)$3,520
• C)$9,520
• D)$7,000
• E)$3,000

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Definitions:

Mediating Variable

A variable that explains the relationship between the independent and dependent variables in research.

Moderator Variable

A variable that affects the strength or direction of the relationship between an independent and a dependent variable.

Independent Variable

A variable that is manipulated or changed in an experiment to see how it affects a dependent variable.

Dependent Variable

In an experiment, it is the variable that is being measured or tested and is expected to change in response to changes in independent variables.