(Ignore income taxes in this problem.) Stutz Company purchased a machine with an

Question

(Ignore income taxes in this problem.) Stutz Company purchased a machine with an estimated useful life of seven years. The machine will generate cash inflows of $8,000 each year over the next seven years. If the machine has no salvage value at the end of seven years, if Stutz's discount rate is 12%, and if the net present value of this investment is $15,000, then the purchase price of the machine was closest to:

A. $36,512

B. $15,000

C. $21,512

D. $17,888

Please show me the work on how you received the answer, Thank you very much!

Explanation / Answer

C. $21,512

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