A Company Can Buy a Machine That Is Expected to Have

question 133

Multiple Choice

A company can buy a machine that is expected to have a three-year life and a $30,000 salvage value. The machine will cost $1,800,000 and is expected to produce a $200,000 after-tax net income to be received at the end of each year. If a table of present values of $1 at 12% shows values of 0.8929 for one year, 0.7972 for two years, and 0.7118 for three years, what is the net present value of the cash flows from the investment, discounted at 12%?

• A) $705,391
• B) $1,918,855
• C) $583,676
• D) $629,788
• E) $118,855

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Definitions:

Occupational Discrimination

Unfair treatment of workers based on characteristics unrelated to job performance, such as race, gender, or religion.

Universal Basic Income

is a social welfare program where a government provides its citizens with a regular, unconditional sum of money, regardless of employment status or income.

Incentives To Work

Factors or motivations that encourage individuals to participate in the workforce, including wages, benefits, and working conditions.

Business Cycle

Recurring increases and decreases in the level of economic activity over periods of years; consists of peak, recession, trough, and expansion phases.