40 A company can buy a machine that is expected to have a three-year life and a $28.000 salvage value. The machine will cost $1,792,000 and is expected to produce a $198.000 after tak net income to be received at the end of each year. If a table of present values of $10 12% shows values of 0.8929 for one year, 0.7972 for two years, and 0.118 for three years, what is the net present value of the cash flows from the investment, discounted at 127 Multiple Choice $115,823 a $579,405 $626,599 $701819 39 Butler Corporation is considering the purchase of new equipment costing $81,000. The projected annual after tax net income from the equipment is $2,900, after deducting $27,000 for depreciation. The revenue is to be received at the end of each year. The machine has a useful life of 3 years and no salvage value. Butler requires a 10% return on its investments. The present value of an annuity of $1 for different periods follows: Periodo 2 3 4 104 0.9091 1.7355 2.4869 3.1699 What is the net present value of the machine? Multiple Choice $67,146 $81,000 38 Poe Company is considering the purchase of new equipment costing $84,000. The projected annual cash inflows are $34.200, to be received at the end of each year. The machine has a useful life of 4 years and no salvage value. Poe requires a 10% return on its investments. The present value of $1 and present value of an annuity of $1 for different periods is presented below. Compute the net present value of the machine 01264 Periods 1 2 3 4 Present Value of $1 at 101 0.9091 0.8264 0.7513 0.6830 Present Value of an Annuity of $1 at 101 0.9091 1.7355 2.4869 3.1699 Multiple Choice $112.340) $12.540 37 Alfarsi Industries uses the net present value method to make investment decisions and requires a 15% annual return on all investments. The company is considering two different investments. Each require an initial investment of $14,600 and will produce cash flows as follows: End of Year 1 2 3 0126:27 Investment B $9,400 $ 0 9,400 0 9,400 28,200 The present value factors of $1 each year at 15% are: 1 2 3 0.8696 0.7561 0.6575 The present value of an annuity of $1 for 3 years at 15% is 2.2832 The net present value of Investment A is: Multiple Choice