A Company Is Considering Purchasing a Machine for $21,000

question 19

True/False

A company is considering purchasing a machine for $21,000. The machine will generate income from operations of $2,000; annual cash flows from the machine will be $3,500. The payback period for the new machine is 6 years.

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Definitions:

Current Amount

The present value or total of a particular financial metric, often used in contrast with past or future amounts.

Stock Variable

A variable measured at a specific point in time, representing a quantity that exists or is accumulated, such as a country's debt or a company's inventory.

Labor

The human effort, both physical and mental, used in the production process.

Capital

Financial assets or the financial value of assets, such as cash and securities; also, factories, machinery, and equipment used to produce goods or services.