A new asset is expected to provide service over the next four years. It will cost $580,000, generates annual cash inflows of $174,000, and requires cash operating expenses of $40,000 each year. In addition, a $20,000 overhaul will be needed in year 3.

Period	FV of 1 (i = 10%)				FV of a series of $1 cash flows (i = 10%)				PV of $1 (i = 10%)				PV of a series of $1 cash flows (i = 10%)
1		1.100				1.000				0.909				0.909
2		1.210				2.100				0.826				1.736
3		1.331				3.310				0.751				2.487
4		1.464				4.641				0.683				3.170

If the company requires a 10% rate of return, the net present value of this machine would be:

Multiple Choice

• $(170,240), and the machine meets the company's rate-of-return requirement.

• $(170,240), and the machine does not meet the company's rate-of-return requirement.

• $(175,220), and the machine does not meet the company's rate-of-return requirement.

• $(199,420), and the machine meets the company's rate-of-return requirement.

• None of the answers is correct.