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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You must pay income tax on ____________ bonds
Fill in the blank(s) with the appropriate word(s).
Mayflower, Inc. provided the following for 2017:
Cost of Goods Sold (Cost of sales) $1,100,000 Beginning Merchandise Inventory 300,000 Ending Merchandise Inventory 630,000 Calculate the average merchandise inventory held by Thomas, Inc during the year. A) $930,000 B) $465,000 C) $300,000 D) $630,000