Finer Company Is Considering the Acquisition of a Machine That

question 23

Multiple Choice

Finer Company is considering the acquisition of a machine that costs $150,000.The machine is expected to have a useful life of 6 years,a negligible residual value,an annual cash flow of $30,000,and annual operating income of $35,000.What is the estimated cash payback period for the machine?

• A)4.3 years
• B)3 years
• C)5 years
• D)6 years

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Definitions:

Melting

The process by which a solid substance changes to a liquid state due to an increase in temperature and/or a decrease in pressure.

Transform Boundaries

Places where two tectonic plates slide past each other horizontally.

Mid-ocean Ridges

Undersea mountain chains formed by the upwelling of magma between diverging tectonic plates, a key site of seafloor spreading.

Continental Margins

The zones of transition between the landmasses of continents and the deep-sea floors, including the continental shelf, slope, and rise.