Use the Information Below to Answer the Following Question(s)

question 75

Multiple Choice

Use the information below to answer the following question(s) .
Wet Water Company drills residential and commercial wells. The company is in the process of analyzing the purchase of a new drill. Information on the proposal is provided below:
Note: Other than the initial investment, cash flows are end of period.
-Upper Darby Park Department is considering a new capital investment. The following information is available on the investment. The cost of the machine will be $150,000. The annual cost savings if the new machine is acquired will be $40,000. The machine will have a 5-year life, at which time the terminal disposal value is expected to be $20,000. Upper Darby Park Department is assuming no tax consequences. If Upper Darby Park Department has a required rate of return of 10%, which of the following is closest to the present value of the project?

• A) $1,632
• B) $12,418
• C) $14,050
• D) $150,000
• E) $70,000

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Definitions:

Praises

Expressions of approval or admiration towards someone or something, often used as a form of encouragement or recognition.

Denies Dessert

The choice to refuse or not partake in a sweet course following a meal, often for health, dietary, or personal reasons.

Piano

A musical instrument played by pressing keys, causing hammers to strike strings, thus producing a wide range of tones.

Operant Conditioning

An instructional process by which the magnitude of a behavior is influenced by giving rewards or imposing punishments.