Ivanhoe Manufacturing is considering the purchase of new computerized equipment. The machine costs $91800 and would generate
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Question:
Ivanhoe Manufacturing is considering the purchase of new computerized equipment. The machine costs $91800 and would generate $23760 in annual cost savings over its 5-year life. At the end of 5 years, the equipment would have a $5400 salvage value. Ivanhoe's required rate of return is 16%.
Using the present value tables, the machine's net present value is nearest (round to the nearest dollar)
a. $118800.
b. $-14003.
c. $-11432.
d. $77797.
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