A Company Is Considering Investing in a Project,which Requires the Purchase

question 51

Multiple Choice

A company is considering investing in a project,which requires the purchase of a new machine for $250,000.The asset has a six-year life,a CCA rate of 30 percent,and an expected salvage value of $30,000.The selling price of the product is $40 per unit,while the variable cost is $18 per unit and the fixed costs are $50,000 per year.The company's effective tax rate is 40 percent and cost of capital is 10 percent.Assume the asset class remains open after the asset is sold.At what level of sales will the company break even?

• A) 3,102 units
• B) 4,011 units
• C) 5,170 units
• D) 6,685 units

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Definitions:

Classical Conditioning

A learning technique involving the frequent pairing of two stimuli, so that a response originally stimulated by the second of the stimuli is in the end stimulated by only the first stimulus.

Law Of Effect

A principle in psychology stating that behaviors followed by positive outcomes are likely to be repeated, whereas behaviors followed by negative outcomes are less likely to be repeated.

Variable-Interval Schedule

A reinforcement schedule in operant conditioning where a response is rewarded after an unpredictable amount of time has passed.

Counterconditioned

The process of changing a previously undesirable response to a stimulus into a desirable one through conditioning.