Question
Vandezande Inc. is considering the acquisition of a new machine that costs $370,000 and has a useful life of 5 years with no salvage value.
Vandezande Inc. is considering the acquisition of a new machine that costs $370,000 and has a useful life of 5 years with no salvage value. The incremental net operating income and incremental net cash flows that would be produced by the machine are (Ignore income taxes.):
| Incremental Net Operating Income | Incremental Net Cash Flows | |||||
| Year 1 | $ | 54,000 | $ | 128,000 | ||
| Year 2 | $ | 31,000 | $ | 105,000 | ||
| Year 3 | $ | 52,000 | $ | 126,000 | ||
| Year 4 | $ | 49,000 | $ | 123,000 | ||
| Year 5 | $ | 48,000 | $ | 122,000 | ||
Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor(s) using the tables provided.
Assume cash flows occur uniformly throughout a year except for the initial investment.
If the discount rate is 10%, the net present value of the investment is closest to:
A: $370,000
B: $457,479
C: $234,000
D: $87,479
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A History Of Auditing The Changing Audit Process In Britain From The Nineteenth Century To The Present Day
Authors: Derek Matthews
1st Edition
0415648343, 978-0415648349
