A Company Is Considering the Purchase of a New Machine

question 112

Multiple Choice

A company is considering the purchase of a new machine for $48,000. Management predicts that the machine can produce sales of $16,000 each year for the next 10 years. Expenses are expected to include direct materials, direct labor, and factory overhead totaling $8,000 per year plus depreciation of $4,000 per year. The company's tax rate is 40%. What is the payback period for the new machine?

• A) 3.0 years.
• B) 6.0 years.
• C) 7.5 years.
• D) 12.0 years.
• E) 20.0 years.

Grasp the significance and application of regression analysis in forecasting.

Learn how to deseasonalize time series data and interpret deseasonalized trends.

Comprehend the process of developing and evaluating forecasting models using mean absolute deviation (MAD) and sum of squares for forecast error (SSE).

Acquire the ability to calculate daily and seasonal indexes for various datasets.

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Definitions:

Oligopoly

A market structure characterized by a small number of firms controlling a significant portion of the market share, leading to limited competition and potentially collaborative behavior among firms.

Tacit Collusion

An agreement among competitors to act in a manner that increases profits without explicitly communicating or formalizing their actions as a pact.

Differentiated Products

Products that are similar but distinguished from each other by features, branding, quality, or other attributes.

Tacit Collusion

An unspoken arrangement between firms in a market to set prices or production levels that benefit them at the expense of market competition.