The Management of Stanforth Corporation Is Investigating Automating a Process

question 48

Multiple Choice

The management of Stanforth Corporation is investigating automating a process. Old equipment, with a current salvage value of $24,000, would be replaced by a new machine. The new machine would be purchased for $516,000 and would have a 6 year useful life and no salvage value. By automating the process, the company would save $173,000 per year in cash operating costs. The simple rate of return on the investment is closest to:

• A)17.7%
• B)16.9%
• C)33.5%
• D)16.7%

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Definitions:

IQ Score

A measure of a person's cognitive abilities and potential, usually represented as a score derived from standardized tests.

Factor Analysis

A statistical technique that enables researchers to determine the relationships among a large number of items, such as test items.

Mental Abilities

The range of cognitive functions and processes that include reasoning, memory, problem-solving, and thinking skills.

Sternberg

Refers to Robert Sternberg, an American psychologist best known for his theory on love and intelligence.