A Machine Costs $1,000,has a Three-Year Life,and Has an Estimated

question 46

Multiple Choice

A machine costs $1,000,has a three-year life,and has an estimated salvage value of $100.It will generate after-tax annual cash flows (ACF) of $600 a year,starting next year.If your required rate of return for the project is 10%,what is the NPV of this investment? (Round your answer to the nearest $10. )

• A)$490
• B)$570
• C)$900
• D)-$150

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Definitions:

Price of Labor

The amount of money that is paid for the work done by employees or laborers.

Demand for Products

Consumers' eagerness and capability to acquire goods and services for certain prices.

Substitution Effect

The change in consumption patterns due to a change in relative prices, leading consumers to substitute one product for another.

Output Effect

The impact on total revenue when a firm alters its production level, influencing the quantity of goods sold and potentially the market price.