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A Company Can Buy a Machine That Is Expected to Have

question 45

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A company can buy a machine that is expected to have a three-year life and a $30,000 salvage value. It will be depreciated using the straight-line method. 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%?


Definitions:

Atrophy

The process of tissue breakdown or decrease in size, often due to disease, injury, or lack of use.

Arthritis

A common condition causing pain and inflammation in a joint, resulting in stiffness and reduced mobility.

Medial temporal lobe

A region of the brain crucial for the formation of long-term memory and associated with the limbic system.

Memory traces

refer to the physical and potentially long-lasting changes in the neural structure of the brain that represent our experience.

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