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41 A company is considering the purchase of new equipment for $78,000. The projected annual net cash flows are $31,100. The machine has a useful
41
A company is considering the purchase of new equipment for $78,000. The projected annual net cash flows are $31,100. The machine has a useful life of 3 years and no salvage value. Management of the company requires a 9% return on investment. The present value of an annuity of $1 for various periods follows:
Period | Present value of an annuity of $1 at 9% |
---|---|
1 | 0.9174 |
2 | 1.7591 |
3 | 2.5313 |
What is the net present value of this machine (rounded to the nearest whole dollar) assuming all cash flows occur at year-end?
Multiple Choice
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$26,000
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$4,100
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$723
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$30,100
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$76,192
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