Question
Poe Company is considering the purchase of new equipment costing $89,000. The projected net cash flows are $44,000 for the first two years and $39,000
Poe Company is considering the purchase of new equipment costing $89,000. The projected net cash flows are $44,000 for the first two years and $39,000 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% | 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
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$35,260.
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$43,304.
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$21,196.
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$(35,260).
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$(21,196).
can u please explain with steps, thank you
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