Malive Park Department Is Considering a New Capital Investment

question 111

Multiple Choice

Malive Park Department is considering a new capital investment.The following information is available on the investment.The cost of the machine will be $119,000.The annual cost savings if the new machine is acquired will be $35,000.The machine will have a 5-year life,at which time the terminal disposal value is expected to be zero.Malive Park is assuming no tax consequences.Malive Park has a 12% required rate of return.What is the payback period for the investment?

• A) 4.2 years
• B) 3.4 years
• C) 5 years
• D) 6.8 years

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Definitions:

Linear Programming

A mathematical technique used for allocation of scarce resources to various operations with the goal of optimizing a certain objective function, typically profit or cost.

Multiple Products

Refers to a business strategy or operational situation where a company offers more than one distinct product or service in its portfolio.

One Product

Refers to a manufacturing or business strategy focused on producing and selling a single type of product.

Time Charges

Fees based on the amount of time spent to perform a service, often used in professional services like law and accounting.