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Hangry Vending Machine Company is looking to expand its business by adding a new line of vending machines. The management team is considering expanding into
Hangry Vending Machine Company is looking to expand its business by adding a new line of vending machines. The management team is considering expanding into either soda machines or snack machines. Following is the relevant financial data relating to the decision: Soda Snack Machines Machines Investment $77,000 $55,000 Useful life (years) 5 12 Estimated annual net cash inflows for useful life $20,000 $18,000 Residual value $30,000 $9,000 Depreciation method Straight-line Straight-line Required rate of return 10% 10% What is the total present value of future cash inflows from the soda machines and residual value? A. $17,450 B. $94,450 C. $125,523 D. $127,000
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