The Tool Box Needs to Purchase a New Machine Costing

question 26

Multiple Choice

The Tool Box needs to purchase a new machine costing $1.46 million.Management is estimating the machine will generate cash inflows of $223,000 the first year and $600,000 for the following three years.If management requires a minimum 12 percent rate of return,should the firm purchase this particular machine? Why or why not?

• A)Yes, because the IRR is 10.75 percent
• B)Yes, because the IRR is 12.74 percent
• C)No, because the IRR is 10.75 percent
• D)No, because the IRR is 12.74 percent
• E)The answer cannot be determined as there are multiple IRRs

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Definitions:

fMRI

Functional Magnetic Resonance Imaging, a neuroimaging procedure that measures brain activity by detecting changes associated with blood flow.

Neuromarketing Technique

A marketing approach that uses neuroscience and psychological principles to influence consumer behavior and enhance marketing strategies.

Oxygenated Blood

Blood that has been enriched with oxygen through the process of respiration in the lungs and is ready to be delivered to the body.

Infrared/Near-Infrared

A spectrum of light and radiation that is not visible to the human eye, adjacent to the red end of the visible spectrum, used in various technologies.