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A company is considering the purchase of new equipment for $60,000. The projected annual net cash flows are $24,500. The machine has a useful life
A company is considering the purchase of new equipment for $60,000. The projected annual net cash flows are $24,500. The machine has a useful life of 3 years and no salvage value. Management of the company requires a 12% return on investment. The present value of an annuity of 1 for various periods follows: Periods Present value of an annuity of 1 at 12% 1 0.8929 2 1.6901 3 2.4018 What is the net present value of this machine assuming all cash flows occur at year-end?
$23,500
$3,500
$(1,156)
$20,000
$56,442
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