The Boyer Bank Wants to Add a New ATM Machine

question 57

Multiple Choice

The Boyer Bank wants to add a new ATM machine in a busy mall.It knows the new machine will cost $60,000 and another $30,000 is required to install it in the mall.It expects to save $0.27 per transaction and generate 100,000 transactions per year.Also,it expects the new machine to last 8 years.What is the expected rate of return or internal rate or return of this project?

• A)25%
• B)3.3%
• C)30%
• D)12%
• E)2.4%

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Definitions:

Federal Income Tax

A charge imposed by the IRS on the yearly income of persons, corporations, trusts, and various legal bodies.

Gross Earnings

The total amount of money earned by an individual or company before deductions such as taxes and retirement contributions.

Withholding Allowance

A claim made by an employee on the W-4 form that reduces the amount of tax withheld from their paycheck.

Federal Income Tax

A tax levied by the United States government on the annual earnings of individuals, corporations, trusts, and other legal entities.