A New, More Efficient Machine Will Last 4 Years and Allow

question 27

Multiple Choice

A new, more efficient machine will last 4 years and allow inventory levels to decrease by $100,000 over its life. At a cost of capital of 13%, how does the net working capital change affect the project's NPV?

• A) NPV increases by $38,668.13.
• B) NPV increases by $61,330.09.
• C) NPV will not change.
• D)NPV increases by $100,000.

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Definitions:

Small Firms

Businesses with a limited number of employees and revenue, often characterized by more personalized customer service and less market control compared to larger companies.

Ergonomics Regulations

Rules and guidelines designed to create safe and comfortable working environments by studying human interaction with elements in the system.

Social Regulation

Policies implemented by the government to protect public interests, including health, safety, and the environment, often affecting how businesses operate.

Repetitive Activities

Tasks or processes that are performed over and over again in a consistent manner, often within a production or manufacturing environment.