MC Qu. 112 A company is considering the purchase of new...

A company is considering the purchase of new equipment for $45,000. The projected annual net cash flows are $19,000. The machine has a useful life of 3 years and no salvage value. Management of the company requires a 12% return on investment. The present value of an annuity of $1 for various periods follows:

Period	Present value of an annuity of $1 at 12%
1	0.8929
2	1.6901
3	2.4018

What is the net present value of this machine assuming all cash flows occur at year-end?

Multiple Choice

• $(1,768)

• $3,000

• $634

• $19,000

• $45,634