Fergus Company Is Considering the Purchase of a Machine That

question 163

Multiple Choice

Fergus Company is considering the purchase of a machine that will save the company $4,000 per year in operating costs for a period of seven years.The most it should pay for the machine is equal to

• A)$4,000 times the present value of an ordinary annuity for 7 periods.
• B)$28,000.
• C)$4,000 divided by the future value of a single sum at the end of 7 periods.
• D)$4,000 times the future value of an ordinary annuity for 7 periods.

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Definitions:

Prior Knowledge

The information and understanding that one already possesses before encountering new information or experiences.

Sensory Register

The component of memory that is responsible for holding information taken in through the senses for a very short period of time.

Sensory Organs

Specialized organs or structures that detect external or internal stimuli, enabling perception of sight, sound, smell, taste, and touch.

Information-Processing Theorists

Scholars who study how humans think, perceive, memorize, and learn, comparing the mind to a computer that processes incoming information.