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

question 42

Multiple Choice

Quip Corporation wants to purchase a new machine for $300,000. Management predicts that the machine will 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 an assumed residual (salvage) value of $50,000. Quip's combined income tax rate, t, is 40%.

What is the expected net income (after tax) in Year 3 if the proposed investment is undertaken? Round answer to nearest whole dollar.

• A) $28,000.
• B) $36,000.
• C) $42,000.
• D) $70,000.
• E) $72,000.

Assess the impact of CEO compensation on company performance and employee wages.

Examine the role and effects of economies of scale in establishing monopolies.

Evaluate the benefits and drawbacks of large retailers like Wal-Mart on consumers and competitors.

Calculate marginal revenue and understand its importance in profit maximization for monopolies.

---

Definitions:

Sensilla

refers to sensory organs or structures in arthropods, such as insects, that detect changes in the external environment.

Electrical Potentials

The difference in electric charge between two points, which can drive the flow of electrons or ions and is fundamental in biological processes and electrical circuits.

Electroreceptors

Sensory organs found in certain animals, allowing them to detect electric fields in their environment.

Magnetic Reception

The ability of an organism to detect magnetic fields, used for navigation and orientation.