Pique Corporation Wants to Purchase a New Machine for $300,000

question 11

Multiple Choice

Pique Corporation wants to purchase a new machine for $300,000. Management predicts that the machine can produce sales of $200,000 each year for the next 5 years. Expenses are expected to include direct materials, direct labor, and factory overhead (excluding depreciation) totaling $80,000 per year. The firm uses straight-line depreciation with no residual value for all depreciable assets. Pique's combined income tax rate is 40%. Management requires a minimum after-tax rate of return of 10% on all investments.

What is the payback period for the new machine (rounded to nearest one-tenth of a year) ? (Assume that the cash inflows occur evenly throughout the year.)

• A) 2.5 years.
• B) 2.7 years.
• C) 3.1 years.
• D) 3.6 years.
• E) 4.2 years.

Understand the Johari Window model and its application in enhancing self-awareness and interpersonal relations.

Recognize the importance of tacit knowledge and how it is acquired in organizational contexts.

Illustrate the benefits of diversity awareness training in creating an inclusive workplace environment.

Understand the contact hypothesis and its implications for reducing stereotyping and improving intergroup relations in organizations.

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Definitions:

Performance

in the context of contracts, refers to the execution of duties or the fulfillment of obligations specified in the contract.

Substantial Performance

A legal concept indicating that a party has completed the major obligations of a contract, even if minor details were not completed, often entitling that party to payment.

Breach of Contract

The inability to fulfill any clause of a contract, whether it's written or spoken, without a valid legal justification.

Damages Awarded

The monetary compensation granted to the plaintiff after a court judgment or settlement, intended to remedy harm caused by the defendant's actions.