DON CorpIs Contemplating the Purchase of a Machine That Will Produce

question 36

Essay

DON Corp.is contemplating the purchase of a machine that will produce net after-tax cash savings of $20,000 per year for five years.At the end of five years,the machine can be sold to realize after-tax cash flows of $5,000.Interest is 12%.Assume the cash flows occur at the end of each year.
Required: Calculate the total present value of the cash savings.

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Definitions:

Radical Behaviorist

A philosophical stance within the field of behaviorism that emphasizes the external behaviors of people and rejects internal processes such as thoughts and emotions as relevant for understanding behavior.

Mental Processes

Internal cognitive activities that include thinking, perceiving, problem-solving, and information processing.

Radical Behaviorism

A philosophy of behavior analysis that emphasizes the study of observable behavior along with environmental and physiological influences.

Stimuli

External or internal events or occurrences that elicit responses from an organism or a system.