MC Qu. 97 A company is considering... A company is considering the purchase of n
ID: 2537614 • Letter: M
Question
MC Qu. 97 A company is considering...
A company is considering the purchase of new equipment for $84,000. The projected annual net cash flows are $33,300. The machine has a useful life of 3 years and no salvage value. Management of the company requires a 9% return on investment. The present value of an annuity of 1 for various periods follows:
$28,000
$4,300
$292
$32,300
$81,761
A company is considering the purchase of new equipment for $84,000. The projected annual net cash flows are $33,300. The machine has a useful life of 3 years and no salvage value. Management of the company requires a 9% return on investment. The present value of an annuity of 1 for various periods follows:
Explanation / Answer
Net present value amount discount PV of $1 factor purchase price -84,000 1 -84000 cash inflow 33,300 2.5313 84292 Net present value 292 Answer $292
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