?0)???15% L Fri 1:29 PM ? ? ? ezto. mheducation Final Exam Su18 ACCT 2112-51 Man

Question

?0)???15% L Fri 1:29 PM ? ? ? ezto. mheducation Final Exam Su18 ACCT 2112-51 Managerial Accounting connect. Acct 2112: ACCT 2112.51 Summer 2012M ACCOUNTING instructions I help Final Exam Question 36 (of 50)> Save & Exit Submit Time remaining: 2:00:26 36. 200 points (ignore income taxes in this problem.) Riveros, Inc., is considering the purchase of a machine that would cost $139,000 and would last for 8 years. At the end of 8 years, the machine would have a salvage value of $38,500. The machine would reduce labor and other costs by $26,900 per year. Additional working capital of $10,900 would be needed immedliately. All of this working capital would be recovered at the end of the life of the machine. The company requires a minimum pretax return of 18% on all investment projects. The net present value of the proposed project is closest to: Click here to view Exhibit 88-1 and Exhibit 88-2 to determine the appropriate discount factor(s) using tables. ? ($37303) 0 ($53,342) O ($9,198) ? ($27062)

Explanation / Answer

$ (27,062)

Years CF Disc factor Discounted CF 0 $ (149,900.00) 1 $ (149,900.00) 1 $      26,900.00 0.84746 $      22,796.67 2 $      26,900.00 0.71819 $      19,319.31 3 $      26,900.00 0.60864 $      16,372.42 4 $      26,900.00 0.5158 $      13,875.02 5 $      26,900.00 0.43712 $      11,758.53 6 $      26,900.00 0.37044 $        9,964.84 7 $      26,900.00 0.31393 $        8,444.72 8 $      76,300.00 0.26604 $      20,298.85 NPV $    (27,069.65)

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