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StormLrd StormLrd
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6 years ago
Alberta Ltd. is considering the purchase of new machinery which costs $147,800. The machine is expected to save $42,300 in operating costs annually for the next 7 years. By how much can the annual cost savings fall (to the nearest hundred dollars) and still provide a 16% return? Ignore income taxes.
A) $5,700
B) $36,600
C) $21,200
D) $42,300
E) $0
Textbook 
Cost Accounting: A Managerial Emphasis, Canadian Edition

Cost Accounting: A Managerial Emphasis, Canadian Edition


Edition: 7th
Authors:
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#1
6 years ago
A
Explanation:  A) -$147,800PV; 7n; 16%i; $0FV; CPT PMT = $36,597.15
Annual Cash Flows can drop $42,300 - $36,600 = $5,700
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