Apex Corp Is Planning to Buy a Production Machine Costing $\$ 100,000$

question 45

Multiple Choice

Apex Corp. is planning to buy a production machine costing $\$ 100,000$ . This machine's expected useful life is five years, with no residual value. Apex uses a discount rate of $10 \%$ and has calculated the following data pertaining to the purchase and operation of this machine:
$\begin{array}{|r|r|}\hline \text { Year } & \text { Estimated Annual Net Cash Inflow } \\\hline 1 & \$ 60,000 \\\hline 2 & \$ 30,000 \\\hline 3 & \$ 20,000 \\\hline 4 & \$ 20,000 \\\hline\end{array}$
$\begin{array}{l}\begin{array} { | l | r | } \hline 5 & \$ 20,000 \\\hline\end{array}\\\text { (Ignore income taxes in this problem.) }\end{array}$
- The net present value of this investment is closest to which of the following? (Do not round your intermediate calculations.)

• A) $20,444.
• B) $81,025.
• C) $50,000.
• D) $80,000.

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Definitions:

Learned Response

A behavior that is developed as a result of conditioning or learning.

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Learning that occurs without any obvious reinforcement of the behaviour or associations that are learned until there is a reason to demonstrate it.

Reflex

A rapid, automatic response to a stimulus, not requiring the involvement of consciousness, designed to protect the body or facilitate basic functions.

Insight Learning

"A form of problem solving in which the organism develops a sudden insight into or understanding of a problem’s solution."