Gamma Electronics Gamma Electronics Is Considering the Purchase of Testing Equipment That

question 70

Multiple Choice

Gamma Electronics
Gamma Electronics is considering the purchase of testing equipment that will cost $500,000 to replace old equipment. Assume the new machine will generate after-tax savings of $250,000 per year over the next four years.
-If Gamma Electronics has a 15% cost of capital,what's the profitability index of the investment?

• A) 1.4
• B) 0.4
• C) 2.0
• D) 1.0

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Definitions:

Methodological Strategy

An approach or plan of action for conducting research, including the methods used for data collection and analysis.

Generalizability

The extent to which research findings can be applied to broader populations or different contexts beyond the original study setting.

Credibility

The quality of being trusted and believed in, often based on a track record of reliability and authenticity.

Specificity

The ability of a test or procedure to correctly identify those without the condition or trait being tested for, minimizing false positives.