Your friend in mechanical engineering has invented a money machine. The main drawback of the machine is that it is slow. It takes one year to manufacture $800. However, once built, the machine will last forever and will require no maintenance. The machine can be built immediately, but it will cost $5,325 to build. Your friend wants to know if he should invest the money to construct it. If the interest rate is 13.5% per year, what should your friend do? What is your advice if the machine takes one year to build?

The NPV of the machine is .......(Round to the nearest dollar.)

Part 2

What should your friend do? (Select the best choice below.)

A.Reject the machine because the NPV is less than $ 0.

B.Accept the machine because the NPV is equal to or less than $0.

C.Accept the machine because the NPV is equal to or greater than $ 0.

Part 3

What is your advice if the machine takes one year to build?

The net present value in this case will be ..... (Round to the nearest dollar.)

Part 4

What should your friend do? (Select the best choice below.)

A.Accept the machine because the NPV is equal to or less than $0.

B.Reject the machine because the NPV is less than $ 0.

C.Accept the machine because the NPV is equal to or greater than $ 0.

D.Reject the machine because the NPV is equal to or greater than $0.