Boston Company Is Contemplating the Purchase of a New Machine

question 89

Multiple Choice

Boston Company is contemplating the purchase of a new machine on which the following information has been gathered:
$\begin{array}{|l|r|}\hline \text { Cost of the Machine } & \$ 38,900 \\\hline \text { Annual Cash Inflows Expected } & \$ 10,000 \\\hline \text { Salvage Value } & \$ 5,000 \\\hline\end{array}$
$$\begin{array} { | l | l | } \hline \text { Life of the Machine } & 6 \text { years } \\\hline\end{array}$$
The company's discount rate is 16%,and the machine will be depreciated using the straight-line method.Given these data,what is the net present value of the machine to the nearest dollar,by not rounding intermediate calculations? (Ignore income taxes in this problem.)

• A) ($26,100).
• B) ($23,900).
• C) $0.
• D) $26,100.

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Definitions:

Voluntary Part-time Workers

Individuals who choose to work hours less than the standard full-time work schedule, not due to economic necessity but personal choice.

Official Statistics

Quantitative data and information collected and published by governmental agencies or institutions for economic, demographic, and social analysis.

Child-care

The care and supervision of a child or children, typically from infancy to age thirteen, which includes educational, entertainment, and nutritional components.

Scientific Management

Scientific management is a system of improving productivity developed in the 1910s by Frederick W. Taylor. After analyzing the movements of workers as they did their jobs, Taylor trained them to eliminate unnecessary actions and greatly improve their efficiency.