Poe Company is considering the purchase of new equipment costing $85,000. The projected annual cash inflows are $35,200, 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% Present Value of an Annuity of $1 at 10% 1 0.9091 0.9091

2 0.8264 1.7355

3 0.7513 2.4869

4 0.6830 3.1699

Multiple Choice

• $(13,951).
• $44,220.
• $13,951.
• $26,580.
• $(26,580).