Vextra Corporation is considering the purchase of new equipment costing $44,000. The projected annual cash inflow is $12,800, to be received at the end of each year. The machine has a useful life of 4 years and no salvage value. Vextra requires a 12% return on its investments. The present value of an annuity of $1 for different periods follows:

Periods	12%
1	0.8929
2	1.6901
3	2.4018
4	3.0373

Compute the net present value of this investment.

rev: 01_20_2021_QC_CS-247807

Multiple Choice

• $(38,877).

• $(2,300).

• $44,000.

• $8,877.

  Incorrect

• $(5,123).

• Alfarsi Industries uses the net present value method to make investment decisions and requires a 15% annual return on all investments. The company is considering two different investments. Each require an initial investment of $14,200 and will produce cash flows as follows:

  End of Year	Investment
  	A			B
  1	$	9,800		$	0
  2		9,800			0
  3		9,800			29,400

  The present value factors of $1 each year at 15% are:

  1	0.8696
  2	0.7561
  3	0.6575

  The present value of an annuity of $1 for 3 years at 15% is 2.2832 The net present value of Investment B is:

  Multiple Choice

• $5,131.

• $(19,331).

• $15,200.

• $48,731.

  Incorrect

• $9,994.