Question
The management of Tony Corporation is considering the purchase of a new machine costing $400,000. No residual value is expected. The company's desired rate of
The management of Tony Corporation is considering the purchase of a new machine costing $400,000. No residual value is expected. The company's desired rate of return is 10%. The present value factors for $1 at compound interest of 10% for 1 through 5 years are 0.909, 0.826, 0.751, 0.683, and 0.621, respectively. In addition to the foregoing information the following data is available.
Year | Income from Operations | Net Cash Flow |
1 | $100,000 | $180,000 |
2 | 40,000 | 120,000 |
3 | 20,000 | 100,000 |
4 | 10,000 | 90,000 |
5 | 10,000 | 90,000 |
The net present value for this investment is:
Group of answer choices
positive $55,200
Negative $99,600
positive $36,400
Negative $126,800
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