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Anna Taylor Buys a Machine for Her Business

Question 46

Multiple Choice

Anna Taylor buys a machine for her business. The machine costs $150,000. Anna estimates that the machine can produce $40,000 cash inflow per year for the next five years. Her cost of capital is 12 percent. Based upon the net present value of this investment, Anna should


A) invest in the machine if she can get a higher cost of capital.
B) not invest in the machine.
C) invest in the machine.
D) Cannot tell without additional information.

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