ontemplating the acquisition of a machine that costs $50,000 and promises to reduce annual cash operating costs by $11,000 over each of the next six years. Which of the following is a proper way to evaluate this investment if the company desires a 12% return on all investments? Select one: a. $50,000 versus -$11,000 × 6. b.
ontemplating the acquisition of a machine that costs $50,000 and promises to reduce annual cash operating costs by $11,000 over each of the next six years. Which of the following is a proper way to evaluate this investment if the company desires a 12% return on all investments? Select one: a. $50,000 versus -$11,000 × 6. b.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Paige Company is contemplating the acquisition of a machine that costs $50,000 and promises to reduce annual cash operating costs by $11,000 over each of the next six years. Which of the following is a proper way to evaluate this investment if the company desires a 12% return on all investments ?
Select one:
a.
$50,000 versus -$11,000 × 6.
b.
$50,000 versus -$66,000 × 0.507.
c.
$50,000 versus -$66,000 × 4.111.
d.
$50,000 versus -$11,000 × 4.111.
e.
$50,000 × 0.893 versus -$11,000 × 4.111.
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