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Use the Information Below to Answer the Following Question(s)

question 150

Multiple Choice

Use the information below to answer the following question(s) .Hawkeye Cleaners has been considering the purchase of an industrial dry-cleaning machine.The existing machine is operable for three more years and will have a zero disposal price.If the machine is disposed of now, it may be sold for $30,000.The new machine will cost $200,000, an additional cash investment in working capital of $60,000 will be required and will be returned at the end of the project.The machine is expected to last 3 years and has an estimated disposal value at that time of $20,000.The new machine will reduce the average amount of time required to wash clothing and will decrease labour costs.The investment is expected to net $50,000 in additional cash inflows during the year of acquisition and $150,000 each additional year of use.These cash flows will generally occur throughout the year and are recognized at the end of each year.Income taxes are not considered in this problem.
-Shirt Company wants to purchase a new cutting machine for its sewing plant.The investment is expected to generate annual cash inflows of $300,000 recognized at the end of each year.The required rate of return is 12 percent and the new machine is expected to last for 4 years.What is the maximum dollar amount Shirt Company would be willing to spend for the machine?

Definitions:

Producing Language

The process of using words, symbols, and grammar to convey meaning and communicate with others.

Right Hemisphere

the half of the brain that controls the left side of the body, often associated with creativity, spatial ability, and facial recognition.

Visual-spatial Skills

The ability to understand, reason, and remember the spatial relations among objects or space.

Brain Part

A specific anatomical component of the brain responsible for various functions, such as the cerebrum for thought and action, or the cerebellum for balance and coordination.