Question
Elf Company is analyzing a special investment project. The project will require the purchase of two machines for $28,000 and $7,000 (both machines are required).
Elf Company is analyzing a special investment project. The project will require the purchase of two machines for $28,000 and $7,000 (both machines are required). The total residual value at the end of the project is $1,700. The project will generate cash inflows of $11,000 and outflows of $2,000 per year over its 8 year life. If Elf Company requires a 6% return, what is the net present value (NPV) of this project? (at a 6% discount rate, the present value of an annuity of $1 is 6.210, and the present value of $1 is 0.627). Round to the nearest dollar.
A. $27,890
B. $31,447
C. $21,956
D. $28,956
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