A Machine Was Purchased for $78,000

question 46

Multiple Choice

A machine was purchased for $78,000.It has a current carrying value of $36,000 and had a depreciable cost of $50,000.Its estimated residual value must have been

• A) $36,000.
• B) $28,000.
• C) $22,000.
• D) $42,000.

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Definitions:

Satisfactory Return

A level of profit or return on investment that meets or exceeds the expectations or benchmarks of an investor or manager.

Capital Budgeting

The process a business undertakes to evaluate potential major projects or investments.

Payback Period

The amount of time it takes for an investment to generate enough cash flow to recoup its original cost.

Net Cash Flow

The difference between a company's cash inflows and outflows within a specified period.