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Author Question: Creighton Industries is considering the purchase of a new strapping machine, which will cost ... (Read 38 times)

craiczarry

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  • Posts: 527
on: Jul 10, 2018
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

Question 2

The primary sources of collateral for secured loans are accounts receivable and inventory.
 
  Indicate whether the statement is true or false
Foundations of Finance ¦ Keown, Petty, Martin ¦ 9th Edition
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Pariscourtney

  • Sr. Member
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Reply #1 on: Jul 10, 2018
Answer to Question 1

C

Answer to Question 2

TRUE


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