Levin Company Is Considering Two New Machines That Should Produce

question 85

Essay

Levin Company is considering two new machines that should produce considerable cost savings in its assembly operations. The cost of each machine is $14,000 and neither is expected to have a salvage value at the end of a 4-year useful life. Levin's required rate of return is 12% and the company prefers that a project return its initial outlay within the first half of the project's life. The annual after-tax cash savings for each machine are provided in the following table:
Required:
1) Compute the payback period for each machine using the incremental approach and comment on the results.2) Compute the unadjusted rate of return based on average investment for each machine. The machines will be depreciated on a straight-line basis.3) Compute the net present value for each machine.4) Which machine would you recommend? Explain your reasoning.5) Use the present value table to compute the approximate internal rate of return for Machine.

Understand the Sherman Antitrust Act's prohibition against contracts, combinations, and conspiracies that restrain trade.

Define monopoly and its implications in the market according to antitrust laws.

Understand the legal considerations and ramifications of tying agreements and exclusive sales contracts.

Comprehend the specifics of laws addressing unfair trade practices and promotional allowances.

---

Definitions:

Lysosomes

Organelles in cells containing enzymes responsible for breaking down waste material and cellular debris.

Nucleoplasm

The semi-fluid substance within the nucleus of a cell, containing the nuclear matrix, nucleolus, and chromatin, supporting and facilitating nuclear processes such as DNA replication.

Nucleolus

A small dense spherical structure in the nucleus of a cell, involved in the production and assembly of ribosomes.

Nucleus

The nucleus is a membrane-bound organelle found in eukaryotic cells that contains most of the cell's genetic material.