Fabian Company Is Considering the Purchase of a Machine That

question 167

Multiple Choice

Fabian Company is considering the purchase of a machine that will save the company $2,000 per year in operating costs for a period of seven years. The most it should pay for the machine is equal to

• A) $2,000 times the present value of an ordinary annuity for 7 periods.
• B) $14,000.
• C) $2,000 divided by the future value of a single sum at the end of 7 periods.
• D) $2,000 times the future value of an ordinary annuity for 7 periods.

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Definitions:

Cancel Policy

A set of rules or conditions under which an insurance policy or an agreement can be terminated before its normal expiration date by either party.

Legal Representation

The act of a lawyer or attorney acting on behalf of an individual, group, or entity in legal proceedings and matters.

Insurance Policies

are contracts between an insurer and an insured, detailing the terms under which the insurer agrees to compensate the insured or beneficiaries for specific losses in exchange for premiums paid.

Accident Burden

The financial and emotional impact of accidents on individuals, families, and society, often assessed in legal and insurance contexts.