Sunny Days Corporation Is Deciding Whether to Automate One Phase

question 149

Multiple Choice

Sunny Days Corporation is deciding whether to automate one phase of its production process. The equipment has a six-year life and will cost $370,000. Projected net cash inflows from the equipment are as follows: Sunny Days Corporation's hurdle rate is 12%. Assume the residual value is zero.
What is the net present value of the equipment?
Present Value of $1
Present Value of Annuity of $1

• A)-$96,403
• B)$11,568
• C)$107,971
• D)$96,403

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Definitions:

Public Organization

An organization established and funded by the government to serve the public interest and provide services not typically offered by private entities.

Private Sector

The part of the economy that is not state-controlled and is run by individuals and companies for profit.

Ad Hoc Relationships

Temporary and specific relationships formed for a particular task or purpose, without a long-term commitment.

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The act of working jointly with others, especially in a joint intellectual effort, to achieve a common goal or produce a shared outcome.