Creighton Industries is considering the purchase of a new strapping machine, which will cost
$150,000, plus an additional $10,500 to ship and install.
The new machine will have a 5-year useful
life and will be depreciated to zero using the straight-line method. The machine is expected to
generate new sales of $45,000 per year and is expected to save $16,000 in labor and electrical
expenses over the next 5-years. The machine is expected to have a salvage value of $20,000.
Creighton's income tax rate is 35%. Creighton uses a 12.5% discount rate for capital budgeting
purposes. What is the machine's NPV?
A) $22,153 B) $29,888 C) $27,894 D) $25,062
C
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Commercial Leasing Corporation and Quarry Construction Company enter into a contract for a lease of three excavators. Under the perfect tender rule, Commercial Leasing must ship or tender goods to the lessee that
a. approximately conform to the contract description. b. entirely conform to the contract description in most ways. c. conform to the contract description in every way. d. substantially conform to the contract description.
Douglas Corporation plans to sell 24,000 units of Product A during July and 30,000 units during August. Sales of Product A during June were 25,000 units. Past experience has shown that end-of-month inventory should equal 3,000 units plus 30% of the next month's sales. On June 30 this requirement was met. Based on these data, how many units of Product A must be produced during the month of July?
A. 24,000 B. 22,200 C. 28,800 D. 25,800
Through marketing research, the Boston Symphony Orchestra (BSO) learned it has an older market and is not attracting younger concertgoers. It next conducted marketing research to determine if an integrated advertising campaign targeted to the younger market would be successful. In its second use of research, BSO employed _____ marketing research.
A. historical B. descriptive C. predictive D. normative E. objective
By setting a common standard for all firms, government can take the cost of pollution control out of competition.
Answer the following statement true (T) or false (F)