Stanton Inc

question 91

Multiple Choice

Stanton Inc.is considering the purchase of a new machine which will reduce manufacturing costs by $5,000 annually and increase earnings before depreciation and taxes by $6,000 annually.Stanton will use the MACRS method to depreciate the machine,and it expects to sell the machine at the end of its 5-year operating life for $10,000 before taxes.Stanton's marginal tax rate is 40 percent,and it uses a 9 percent required rate of return to evaluate projects of this type.If the machine's cost is $40,000,what is the project's NPV?

• A) $1,014
• B) $2,292
• C) $7,550
• D) $817
• E) $5,040

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Definitions:

Cross-Border Mergers

Transactions where companies from different countries combine their operations or assets, often to expand market reach or leverage strategic advantages.

Direct Foreign Investment

A financial commitment made by a company or individual in one country to business interests in another country, typically via acquiring business assets or establishing business operations.

Differing Languages

The existence or use of distinct linguistic systems or dialects within communication that can lead to diversity in expression and misunderstanding.

Transnational Organizations

Entities that operate across national borders, managing operations in several countries while not identifying with a single national identity.