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A company is deciding whether to invest in a vending machine at a cost of 2,500. It is expected to produce positive net cash inflows
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A company is deciding whether to invest in a vending machine at a cost of 2,500. It is expected to produce positive net cash inflows of 1,000 a year for each of the next 3 years (residual value = nil). The business uses a discount rate of 10% and the discount factors are shown in the table below.
Year
10% discount factors
0
1.0000
1
0.9091
2
0.8264
3
0.7513
What is the Net Present Value of the vending machine investment?
A. 14
B. minus 14
C. 1,500
D. minus 1,500
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