A Company Can Buy a Machine That Is Expected to Have

question 50

Multiple Choice

A company can buy a machine that is expected to have a three-year life and a $30,000 salvage value. The machine will cost $1,800,000 and is expected to produce a $200,000 after-tax net income to be received at the end of each year. If a table of present values of 1 at 12% shows values of 0.8929 for one year, 0.7972 for two years, and 0.7118 for three years, what is the net present value of the cash flows from the investment, discounted at 12%?

• A) $118,855
• B) $583,676
• C) $629,788
• D) $705,391
• E) $1,918,855

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Definitions:

Conflicts of Interest

Situations where individuals' personal interests might compromise their decision-making or duties.

Ethical Dilemmas

Situations in which a person must choose between two or more conflicting moral principles, making it challenging to decide the right course of action.

Bribe or Kickback

Illegal or unethical payments made to secure advantage or favour in a commercial or official transaction.

Ethical Dilemma

A situation where making a decision involves a conflict between moral imperatives, where to obey one would result in transgressing another.