Phoxco Is Considering Automating Its Production Line at a Cost

question 108

Multiple Choice

Phoxco is considering automating its production line at a cost of $40,000 to acquire the necessary equipment. The annual cost savings are expected to be $8,000 for 14 years. The firm requires a 20% rate of return. Ignore income taxes.
What is the internal rate of return on this investment?

• A) Less than 20%
• B) Equal to 20%
• C) More than 20%
• D) Cannot be determined

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Definitions:

Majority Culture

The dominant cultural practices, values, and norms within a society, exerting a strong influence on behavior and attitudes of its members.

Bicultural Identity Formation

The process by which individuals integrate and negotiate two distinct cultural identities.

African-American Adolescent

Any young individual, generally aged between 13 and 19, who identifies as part of the African-American or Black community in the United States.

Integration

The process of combining or coordinating separate parts or groups into a unified whole, often referring to social and cultural inclusion of individuals or groups.