Callendula Company Is Considering the Purchase of a New Machine

question 91

Multiple Choice

Callendula Company is considering the purchase of a new machine for $80,000. The machine would generate an annual cash flow before depreciation and taxes of $28,778 for five years. At the end of five years, the machine would have no salvage value. The company's cost of capital is 12 percent. The company uses straight-line depreciation with no mid-year convention and has a 40 percent tax rate. What is the internal rate of return for the machine rounded to the nearest percent?

• A)between 16 and 18%
• B)between 14 and 16%
• C)between 12 and 14%
• D)below 12%

---

Definitions:

Aggression

Behavior intended to harm or injure another living being who is motivated to avoid such treatment.

Psychodynamic Approach

A psychological theory or approach that emphasizes the influence of the unconscious mind on behavior, originated by Sigmund Freud.

Psychology

Research focused on understanding the human brain and its activities, mainly as they impact behavior in certain situations.

Unconscious Mind

That part of the mind which is inaccessible to the conscious mind but that affects behaviors and emotions.