The management of Penfold Corporation is considering the purchase of a machine that would cost $400,000, would last for 10 years, and would have no salvage value. The machine would reduce labor and other costs by $60,000 per year. The company requires a minimum pretax return of 13% on all investment projects.

Click here to viewExhibit 12B-1andExhibit 12B-2, to determine the appropriate discount factor(s) using the tables provided.

The net present value of the proposed project is closest to (Ignore income taxes.):

Multiple Choice

• $(74,440)
• $(34,440)
• $(134,440)
• $(399,997)