The Manager of Malan Pty Ltd Wants to Buy a New

question 53

Multiple Choice

The manager of Malan Pty Ltd wants to buy a new machine to replace the one currently being used. The new machine will cost $100 000 with no disposal value at the end of a five-year useful life. The manager estimates that the machine will reduce annual operating costs by $30 000. Depreciation will be $20 000 per year for five years. The tax rate for each year is expected to be 20 per cent and the company has an after-tax hurdle rate of 12 per cent. What is the after-tax accounting rate of return computed based on the initial investment?

• A) 8%
• B) 20%
• C) 4%
• D) 10%

---

Definitions:

Maslow's

Refers to Maslow's hierarchy of needs, a psychological theory that prioritizes human needs from the most basic physiological necessities to the need for self-actualization.

Humanistic Theorists

Psychologists who emphasize the study of the whole person and believe that individuals have free will and a natural desire towards self-improvement and deeper understanding of themselves.

Individual Selfishness

The tendency for individuals to prioritize their own interests over the welfare of others.

Self-indulgence

The act of allowing oneself to enjoy the pleasure of consuming goods, services, or experiences to an excessive or unwarranted degree.