Lenardi Corporation Is Evaluating the Purchase of a New Machine

question 186

Multiple Choice

Lenardi Corporation is evaluating the purchase of a new machine that would have an initial cost of $110,000. This new machine would have a profitability index of 2.50. The company's discount rate is 15%. What is the present value of the net cash inflows of the new machine project?

• A)$16,500
• B)$275,000
• C)$44,000
• D)$733,333

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Definitions:

Rugae

The folds in the mucous membrane of the stomach, which allow for expansion as the stomach fills.

Hydrolysis

A process where water is utilized to decompose a specific substance by breaking its bonds.

Polypeptides

Chains of amino acids linked by peptide bonds, which can function independently or as part of larger protein molecules.

Pepsinogen

An inactive precursor of pepsin, secreted by the stomach lining; it is converted to pepsin in the presence of stomach acid to digest proteins.