Courtmaster Provides Superturf for Tennis Courts

question 64

Multiple Choice

Courtmaster provides superturf for tennis courts. The company has recently investigated investing in a new machine, which will speed up the laying of the superturf. The old machine has a remaining life of 5 years, and the new equipment has a value of $150,000 with a five-year life. The expected additional cash inflows are $35,000 per year. In what range is the internal rate of return for the new machine?

• A)4 - 6%.
• B)2 - 4%.
• C)6 - 8%.
• D)8 - 10%.

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Definitions:

Consumer Surplus

The gap between what consumers are prepared to pay for a product or service and what they end up spending.

Producer Surplus

The difference between the amount producers are willing to accept for a good or service versus what they actually receive, reflecting their net gain.

Tax

A mandatory charge or alternative form of financial levy extracted from a taxpayer by governmental authorities for the aim of supporting governmental spending and numerous public financial commitments.

Diversity

entails the inclusion and representation of different types of people and viewpoints in a group, organization, or society, valuing differences in race, gender, age, cultural background, etc.