A Company Is Considering the Purchase of a New Machine

question 40

Multiple Choice

A company is considering the purchase of a new machine for $48,000. Management predicts that the machine can produce sales of $16,000 each year for the next 10 years. Expenses are expected to include direct materials, direct labor, and factory overhead totaling $12,000 per year including depreciation of $3,000 per year. The company's tax rate is 40%.
- What is the annual cash flow for the new machine?

• A) $4,000.
• B) $2,400.
• C) $7,000.
• D) $5,400.
• E) $1,600.

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Definitions:

Stressor

An event, situation, or stimulus that causes stress or strain on an individual.

Burnout

A state of physical, emotional, and mental exhaustion caused by prolonged and excessive stress, often related to one's work or career.

Productivity

The effectiveness of productive effort, especially in industry, as measured in terms of the output of goods and services per unit of input.

Incongruence

The difference between one's self-image and the reality of one's experiences or the discrepancy between one's ideal self and actual self.