Assume that a company is considering purchasing a machine for $100,000 that will have a seven-year useful life and a $17,000 salvage value. The machine will lower operating costs by $18,000 per year and increase sales volume by 1,000 units per year. The company earns a contribution margin of $3.00 per unit. The company also expects this investment to provide qualitative benefits that it is struggling to incorporate into its financial analysis. Assuming the company’s required rate of return is 17%, the minimum dollar value per year that must be provided by the machine’s qualitative benefits to justify the $100,000 investment is closest to: Click here to view Exhibit 7B-1 and Exhibit 7B-2, to determine the appropriate discount factor(s) using the tables provided. Multiple Choice $4,154. $3,054. $3,364. $4,084.
Time Remaining 1 hour 57 minutes 54 seconds
01:57:54Item 6
Time Remaining 1 hour 57 minutes 54 seconds
01:57:54
Assume that a company is considering purchasing a machine for $100,000 that will have a seven-year useful life and a $17,000 salvage value. The machine will lower operating costs by $18,000 per year and increase sales volume by 1,000 units per year. The company earns a contribution margin of $3.00 per unit. The company also expects this investment to provide qualitative benefits that it is struggling to incorporate into its financial analysis. Assuming the company’s required
Click here to view Exhibit 7B-1 and Exhibit 7B-2, to determine the appropriate discount factor(s) using the tables provided.
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$4,154.
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$3,054.
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$3,364.
-
$4,084.
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