Assume the Initial Cost of One Customized Tool and Die

question 28

Multiple Choice

Assume the initial cost of one customized tool and die machine is $684,000 and costs $12,600 a year to operate.Each machine has a life of three years before it is replaced.Ignore taxes.What is the equivalent annual cost of this machine if the required return is 14 percent?

• A)$237,750.85
• B)$268,411.15
• C)$307,220.33
• D)$240,600.00
• E)$289,038.11

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Definitions:

Offer Price

The price at which an entity is willing to sell shares or securities to potential buyers.

Venture Capitalist

An investor who provides capital to startup companies and small businesses with perceived long-term growth potential in exchange for an equity stake.

Lifecycle

The series of changes in the life of an organism, product, or system from its beginning to its end.

Screening Opportunity

The process of evaluating business opportunities to determine their viability and potential for success.