(Ignore Income Taxes in This Problem

question 45

Multiple Choice

(Ignore income taxes in this problem.) Meharg Corporation is considering the purchase of a machine that would cost $120,000 and would last for 5 years. At the end of 5 years, the machine would have a salvage value of $25,000. By reducing labor and other operating costs, the machine would provide annual cost savings of $30,000. The company requires a minimum pretax return of 10% on all investment projects.
-The present value of the annual cost savings of $30,000 is closest to:

• A)$18,630
• B)$183,163
• C)$150,000
• D)$113,730

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Definitions:

Birthmark

A congenital, usually benign, irregularity on the skin which is present at birth or appears shortly after birth, often as a result of localized concentrations of melanin or vascular anomalies.

Nevus

A medical term for a mole or birthmark, which is a benign growth on the skin that is formed by a cluster of melanocytes.

Lesions

Any abnormal tissue or damage found on or in the body, often identified through diagnostic processes.

Gas-Filled

Describes objects or spaces filled with gas, often related to medical conditions or mechanical systems.