Where necessary, use the table of present value factors. A link to download a copy of the PV factors is provided in the test instructions guidelines.

A manufacturing company wants to purchase a machine for $$40,000$ but needs to earn a $12\%$ return. The machine is to be depreciated straight line over $4$ years with zero salvage value. The expected year$-$end accrual net incomes are $$2,834$ in the first year, $$2,000$ in each of

years two and three, and $$7,005$ in the fourth year.

Rounding to the nearest whole dollar, should the company buy the machine?

No$,$ because the net present value is$-374.$

Yes, because the net present value is $0$ and meets the expected rate of return.

Yes, because the net present value is $374.$

No$,$ because the net present value is $0$ and does not meet the expected rate of return.

No$,$ because the net present value is $-40,374.$

Unable to compute NPV without more data.

Yes, because the net present value is $40,374.$