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Poe Company is considering the purchase of new equipment costing $80,500. The projected annual cash inflows are $30,700, to be received at the end of
Poe Company is considering the purchase of new equipment costing $80,500. The projected annual cash inflows are $30,700, to be received at the end of each year. The machine has a useful life of 4 years and no salvage value. Poe requires a 10% return on its investments. The present value of $1 and present value of an annuity of $1 for different periods is presented below. Compute the net present value of the machine. Periods Present Value of $1 at 10% 0.9091 0.8264 0.7513 0.6830 Present Value of an Annuity of $1 at 10% 0.9091 1.7355 2.4869 3.1699 $(5,801). $16,816. $33,522. $5,801. $(16,816). Poe Company is considering the purchase of new equipment costing $82,500. The projected net cash flows are $37,500 for the first two years and $32,500 for years three and four. The revenue is to be received at the end of each year. The machine has a useful life of 4 years and no salvage value. Poe requires a 10% return on its investments. The present value of $1 and present value of an annuity of $1 for different periods is presented below. Compute the net present value of the machine. Periods Present Value of $1 at 10% 0.9091 0.8264 0.7513 0.6830 Present Value of an Annuity of $1 at 10% 0.9091 1.7355 2.4869 3.1699 Multiple Choice $(21,156). $19,423). $29,199. $21,156. $9,423
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