ABC Purchased a Machine for $2,575,000

question 42

Multiple Choice

ABC purchased a machine for $2,575,000. Required modifications will cost $375,000. ABC will need to invest $75,000 for additional inventory. The machine has an IRS approved useful life of 7 years; it is presumed to have no salvage value. It will only be operated for 3 years, after-which it will be sold for $600,000. ABC plans to depreciate the machine by using the straight-line method. Assume that the firm's tax rate is 40%. What is the termination (non-operating) cash flow from the machine in year three?

• A) $900,623
• B) $1,109,286
• C) $1,298,114
• D) $879,247

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Definitions:

Persuading

The process of convincing someone to do or believe something through reasoning or the use of emotion.

Stereotypes

Stereotypes are oversimplified generalizations about groups of people that can lead to assumptions and biases.

Distinct Differences

Clear and noticeable variations or disparities between things or entities.

Groupthink

A psychological phenomenon that occurs within a group of people in which the desire for harmony or conformity in the group results in an irrational or dysfunctional decision-making outcome.