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Discount Dollar Store is considering the purchase of a new machine costing $220,000. This machine is estimated to generate an additional $88,000 per year in

  1. Discount Dollar Store is considering the purchase of a new machine costing $220,000. This machine is estimated to generate an additional $88,000 per year in revenues. The machine will be depreciated using the straight-line method over its 4-year life. There is no expected salvage value at the end of its life. Expected annual net cash flows are $67,240 and expected annual net income from the new machine total $12,240. The required rate of return is 8% and the income tax rate is 28%. How much is the net present value of this project?

$2,706

($179,460)

$71,465

$153,390

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