Suppose a New Machine Costs $100,000 and Will Provide Nominal

question 52

Multiple Choice

Suppose a new machine costs $100,000 and will provide nominal operating income of $50,000 in each of the next four years.The machine belongs to asset class 9,which has a CCA rate of 30 percent.The machine is expected to be sold for $25,000 at the end of four years.The real discount rate has been estimated to be 8 percent per year.Expected inflation is 2.5 percent over the next four years.The firm's marginal tax rate is 38%.Assume there are other assets in the asset class when the machine is sold.What is the NPV of the project?

• A) $35,435.83
• B) $44,427.84
• C) $94,761.86
• D) $107,358.25

---

Definitions:

Economic System

The structure and methods by which a society organizes and allocates its resources, goods, and services, including systems such as capitalism, socialism, and communism.

Craft Unionism

A form of unionism where workers from a particular trade or craft form an exclusive union to secure better working conditions, wages, and employment standards for their members.

Union Membership

Denotes individuals who are formally part of a labor union, an organization that represents workers in negotiations with employers over wages, benefits, and working conditions.

Legislative Protections

Laws and regulations designed to protect the rights and welfare of individuals, such as workers or consumers, in various aspects of life and commerce.