Miles, Inc A)$23,958 Per Year

Miles, Inc. is considering the purchase of a new machine for $600,000 that has an estimated useful life of 5 years and no salvage value. The machine will generate net annual cash flows of $105,000. It is believed that the new machine will reduce downtime because of its reliability. Assume the discount rate is 8%. In order to make the project acceptable, the reduction in downtime must be worth $\begin{array}{lrr}\text { Year } & \text { Present Value } & \text { PV of an Annuity } \\&\text { of } 1 \text { at } 8 \% & \text { of } 1 \text { at } 8 \%\\1 & .926 & .926 \\2 & .857 & 1.783 \\3 & .794 & 2.577 \\4 & .735 & 3.312 \\5 & .681 & 3.993\end{array}$

A) $23,958 per year.
B) $49,662 per year.
C) $18,264 per year.
D) $45,263 per year.