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considered, with a cost of $60,000. The new machine is more efficient
and it will only cost $200 a month for maintenance and repairs. The
new machine has an expected life of 10 years. In deciding to replace
the old machine, which of the following factors, ignoring income
taxes, should ABC not consider?
19. Egan Co. owns land that could be developed in the future. Egan
estimates it can sell the land for $1,200,000, net of all selling costs. If it
is not sold, Egan will continue with its plans to develop the land. As
Egan evaluates it options for development or sale of the property, what
type of cost would the potential selling price represent in Egan's
decision?
20. Which of the following statements is true regarding opportunity
cost?
21. For the year ended December 31, 2004, Abel Co. incurred direct
costs of $500,000 based on a particular course of action during the
year. If a different course of action had been taken, direct costs would
have been $400,000. In addition, Abel's 2004 fixed costs were $90,000.
The incremental cost was
22. Pole Co. is investing in a machine with a 3-year life. The machine
is expected to reduce annual cash operating costs by $30,000 in each
of the first 2 years and by $20,000 in year 3. Present values of an
annuity of $1 at 14% are:Using a 14% cost of capital, what is the
present value of these future savings?
23. Which one of the following kinds of tables most likely would be
used to determine the current worth of five equal amounts to be
received at the end of each of the next five years.
24. Which of the following changes would result in the highest
present value?