A Company Is Planning to Purchase a Machine That Will

question 67

True/False

A company is planning to purchase a machine that will cost $24,000,have a 6-year life,and have no salvage value.The company expects to sell the machine's output of 3,000 units evenly throughout each year.Total income over the life of the machine is estimated to be $12,000.The machine will generate net cash flows per year of $6,000.The payback period for the machine is 4 years.

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Definitions:

Operating Activities

Transactions and events that relate to the primary operations of the company, such as sales and services.

Acquisition Of Equipment

The process of obtaining capital or operational assets, like machinery or tools, necessary for conducting business.

Investing Activities

Purchases or sales of assets, loans made to suppliers or received from customers, or any changes in cash from investing in the financial markets.

Machinery

Assets consisting of tools, equipment, and facilities used in production or manufacturing processes.