A Machine Is Expected to Produce Annual Savings in Cash

question 15

Multiple Choice

A machine is expected to produce annual savings in cash operating costs of $400,000 for the next six years. If the company has a 10% after-tax hurdle rate and is subject to a 30% income tax rate, the correct discounted net cash flow would be:

• A)$522,600.
• B)$947,520.
• C)$1,219,400.
• D)$1,680,000.
• E)$1,742,000.

Recognize and understand the organization of descriptive paragraphs.

Identify and correct spelling errors in written text.

Recognize and correct errors related to word choice, particularly homophones and common look-alike/sound-alike mistakes.

Understand and apply organizational patterns in paragraph development, including spatial and logical order.

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Definitions:

Divisional Operating Income

The earnings generated from the operations of a specific division within a company, excluding costs and income from other divisions or corporate activities.

Investment Turnover

A ratio that measures the efficiency of a company in using its investments to generate sales or revenue.

Operating Income

The income generated from the primary activities of a company, before subtracting any interest and tax expenses.

Profit Margin

A financial metric indicating the percentage of revenue that exceeds the cost of goods sold, representing the proportion of sales that turns into profit.