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Stutz Company purchased a machine with an estimated useful life of eight years. The machine will generate cash inflows of $9,000 each year over the
Stutz Company purchased a machine with an estimated useful life of eight years. The machine will generate cash inflows of $9,000 each year over the next eight years. The machine will have no salvage value at the end of the eight years. If the net present value of this investment is $6,000, then what was the cost of the machine?
Use a minimum desired rate of return of 10%.
a. $42,015. b. $40,314. c. $54,015. d. $37,812.
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