Chicago Co

question 71

Multiple Choice

Chicago Co. is interested in purchasing a machine that would improve its operational efficiency. The cost is $200,000 with an estimated residual value of $20,000 and a useful life of eight years. Cash inflows are expected to increase by $40,000 a year. The company's minimum rate of return is 10 percent. The present value of $1 for eight years at 10 percent is 0.467, and the present value of an annuity of $1 at 10 percent and eight years is 5.335. The project earns a rate of return of

• A) Unable to determine from the data given
• B) greater than 10 percent.
• C) less than 10 percent.
• D) 10 percent.

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Definitions:

Prefrontal Lobotomy

The severing or destruction of a section of the frontal lobe of the brain.

Antonio Egas Moniz

A Portuguese neurologist who was a pioneer in the development of cerebral angiography and lobotomy, for which he received the Nobel Prize in Physiology or Medicine in 1949.

Fritz Perls

A psychiatrist and psychotherapist known for developing Gestalt therapy, which emphasizes personal responsibility and living in the present moment.

Conditioning

A process of behavioral modification by which a subject comes to associate a desired behavior with a previously unrelated stimulus.