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:

Virtual Teams

Groups that interact primarily through electronic means, with little, if any, in-person contact.

Globalization

The tendency of firms to extend sales, ownership, and/or manufacturing to new markets abroad.

Dysfunctions of a Team

The obstacles or behaviors that hinder a team's effectiveness and productivity, such as lack of trust, fear of conflict, or avoidance of accountability.

Accountability

The responsibility to report, explain, or justify actions; the acknowledgment and assumption of responsibility for actions and decisions.