Question
The management of River Corporation is considering the purchase of a new machine costing $380,000. The company's desired rate of return is 6%. The present
The management of River Corporation is considering the purchase of a new machine costing $380,000. The company's desired rate of return is 6%. The present value factor for an annuity of $1 at interest of 6% for 5 years is 4.212. In addition to the foregoing information, use the following data in determining the acceptability of this investment:
By converting dollars to be received in the future into current dollars, the present value methods take into consideration that money a.is the measure of assets, liabilities, and stockholders' equity on financial statements b.has an international rate of exchange c.has a time value d.is the language of business | ||||
The net present value for this investment is
a.$20,140
b.$(19,875)
c.$(20,140)
d.$19,875
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