Gamma Electronics Is Considering the Purchase of Testing Equipment That

question 77

Multiple Choice

Gamma Electronics is considering the purchase of testing equipment that will cost $500,000.The equipment has a 5-year lifetime with no salvage value.Assume the new machine will generate after-tax savings of $100,000 per year for the five years.
If the firm has a 15% cost of capital,what is the equivalent annual cost of the equipment?

• A) $32,924
• B) $42,746
• C) $49,158
• D) $37,863

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Definitions:

Noncoding DNA

Segments of DNA that do not code for proteins but have roles in regulating gene expression.

Spindle

Temporary structure that moves chromosomes during nuclear division; consists of microtubules.

Motor Proteins

Proteins that convert chemical energy into mechanical work, moving along cytoskeletal filaments to transport cargo, contract muscles, or enable cell motility.