A Company Is Considering the Purchase of New Equipment for $45,000

question 151

Multiple Choice

A company is considering the purchase of new equipment for $45,000. The projected annual net cash flows are $19,000. The machine has a useful life of 3 years and no salvage value. Management of the company requires a 12% return on investment. The present value of an annuity of $1 for various periods follows:
$\begin{array} { l c } \text { Period } & \text { Present value of an annuity of } 1 \text { at } 12 \% \\\hline 1 & 0.8929 \\3 & 1.6901 \\3 & 2.4018\end{array}$
What is the net present value of this machine assuming all cash flows occur at year-end?

• A) $19,000
• B) $3,000
• C) $634
• D) $(1,768)
• E) $45,634

Identify the challenges and barriers faced by women in organizations.

Recognize the role of cooperation and trust in social interactions.

Grasp the significance of major technological inventions in societal evolution.

Understand the emergence and impact of social inequality alongside societal evolution.

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Definitions:

Activity Driver

A factor that influences or contributes to the expense of certain business operations, often used in activity-based costing.

High-volume Product Lines

Product categories within a company that produce or sell in large quantities, typically generating significant portions of revenue.

Cost Distortion

An inaccurate allocation of costs to products, often resulting from traditional costing methods that can overstate or understate the true costs of goods.

Activity-based Costing Systems

A method in accounting that assigns costs to products or services based on the activities that go into producing them, aiming to provide more accurate costing.