Question
Gnome Place Like Home, Inc. is evaluating the purchase of a new machine to use in its manufacturing process. The new machine would cost
Gnome Place Like Home, Inc. is evaluating the purchase of a new machine to use in its manufacturing process. The new machine would cost $37,000 and have a useful life of 6 years. At the end of the machine's life, it would have a residual value of $2,200. Annual cost savings from the new machine would be $12,300 per year for each of the 6 years of its life. The company has a minimum required rate of return of 16% on all new projects. The net present value of the new machine would be closest to: (Round any intermediary calculations and your final answer to the nearest dollar.) Present Value of $1 Periods 14% 16% 18% 5 0.519 0.476 0.437 6 0.456 0.410 0.370 7 0.400 0.354 0.314 Present Value of Annuity of $1 Periods 14% 16% 18% 5 3.433 3.274 3.127 6 3.889 3.685 3.498 7 4.288 4.039 3.812 OA. $45,326. O B. $902. OC. $9,228. OD. $8,326.
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