Poe Company Is Considering the Purchase of New Equipment Costing

question 61

Multiple Choice

Poe Company is considering the purchase of new equipment costing $80,000. The projected annual cash inflows are $30,200, to be received at the end of each year. The machine has a useful life of 4 years and no salvage value. Poe requires a 10% return on its investments. The present value of an annuity of $1 and present value of an annuity for different periods is presented below. Compute the net present value of the machine. $\begin{array} { c c c } \text { Periods } & \begin{array} { r } \text { Present Value } \\\text { of } \$ 1 \text { at } 10 \%\end{array} & \begin{array} { c } \text { Present Value of an } \\\text { Annuity of } \$ 1 \text { at } 10 \%\end{array} \\1 & 0.9091 & 0.9091 \\2 & 0.8264 & 1.7355 \\3 & 0.7514 & 2.4869 \\4 & 0.6830 & 3.1699\end{array}$

• A) $4,896.
• B) $(4,896).
• C) $15,731.
• D) $32,334.
• E) $(15,731).

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Definitions:

Behaviourism

A psychological approach focusing on observable behaviors and the ways in which they are learned or conditioned, excluding the analysis of emotions or thoughts.

Psychological Research

The systematic investigation of psychological issues and phenomena through controlled experimentation, observation, and analysis.

Structuralism

An early school of psychology that sought to understand the structure of the mind by analyzing the components of conscious experience.

Humanism

A philosophical and ethical stance that emphasizes the value and agency of human beings, individually and collectively, often highlighting the importance of human dignity and potential.