Baird Bros

question 51

Essay

Baird Bros.Construction is considering the purchase of a machine at a cost of $125,000.The machine is expected to generate cash flows of $20,000 per year for 10 years and can be sold at the end of 10 years for $10,000.Interest is at 10%.Assume the machine purchase would be paid for on the first day of year one,but that all other cash flows occur at the end of the year.Ignore income tax considerations.
Required: Determine if Baird should purchase the machine.

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Definitions:

Actual Notice

The direct and explicit knowledge given to a person about a specific piece of information, ensuring they are aware of it.

Constructive Notice

Legal notice presumed by law to have been acquired by a person and thus binding on that person, regardless of actual knowledge of the notice.

Subagent

An agent appointed by another agent with the original principal's authorization, typically to help perform some duty or function.

Apparent Authority

The appearance or assumption of authority based on the actions or representations of the principal.