more multiple choice answers to be choosen from they cut off The following prese

Question

more multiple choice answers to be choosen from they cut off

The following present value factors are provided for use in this problem. Present value of Present value an annuity of 1 at Periods of 1 at 12% 0.8929 0.7972 0.7118 0.6355 12% 0.8929 1.6901 2.4018 3.0373 2 3 Cliff Co. wants to purchase a machine for $40,000, but needs to earn an 12% return. The expected year-end net cash flows are $13,000 in each of the first three years, and $17,000 in the fourth year. What is the machine's net present value (round to the nearest whole dollar)? Multiple Choice $(8,777. $2,027 K Prey 28 of 35 Next> F1 F3

Explanation / Answer

Net present value is the difference of initial investment and present value of net cash flows.

Net present value = -$40000 + $13000 (2.4018) + $17000*0.6355

= $2027

Therefore, 2nd option is correct.

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