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Poe Company is considering the purchase of new equipment costing $88,500. The projected annual cash inflows are $38,700, to be received at the end of
Poe Company is considering the purchase of new equipment costing $88,500. The projected annual cash inflows are $38,700, 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 1 2 3 4 Present Value of $1 at 10 0.9091 0.8264 0.7513 0.6830 Present Value of an Annuity of $1 at 108 0.9091 1.7355 2.4869 3.1699 Multiple Choice O O $52,541 $(20,290). $34,175. O $20,290. O O $(34,175)
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