Phoxco Is Considering Automating Its Production Line at a Cost

question 2

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.
The net present value for this investment is:

• A) Positive
• B) Zero
• C) Negative
• D) Cannot be determined

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Definitions:

Adrenal Medullary Hormones

Hormones produced by the adrenal gland's medulla, such as adrenaline and noradrenaline, that are involved in stress responses.

Stress

The body’s method of reacting to a condition such as a threat, challenge or physical and psychological barrier, stimulating a fight or flight response.

Blood Glucose

The concentration of glucose present in the blood, important for energy supply and metabolic regulation.

Consuming Meal

The act of eating food, which initiates the digestion process and provides the body with nutrients and energy.