Your Firm Needs a Computerized Machine Tool Lathe That Costs

question 72

Multiple Choice

Your firm needs a computerized machine tool lathe that costs $50,000, requires $10,000 in installation, $5,000 in freight charges, and another $12,000 in maintenance for each year of its three-year life. After three years, this machine will be replaced. The machine falls into the MACRS three-year class life category. Assume a tax rate of 30 percent and a discount rate of 12 percent. Calculate the depreciation tax shield for this project in year 1.

• A)$6,499.35
• B)$6,886.00
• C)$5,999.40
• D)$5,554.40

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Definitions:

Groupthink

A psychological phenomenon where the cohesion of the group becomes more important than considering facts realistically, leading to poor decisions.

Suppress Disagreement

The act of deliberately preventing or reducing the expression of differing opinions or conflicts.

Harmony

A pleasing combination or arrangement of different things, often referring to music, but also applicable to social and personal contexts.

Just-World Hypothesis

The cognitive bias or belief that the world is fundamentally fair, leading individuals to rationalize an otherwise inexplicable injustice as deserved by the victim.