A company is considering the purchase of new equipment for $45,000.The projected annual net cash flows are $19,000.The machine has a useful life of 3 years and no salvage value.Management of the company requires a 12% return on investment.The present value of an annuity of 1 for various periods follows: What is the net present value of this machine assuming all cash flows occur at year-end?
A)$(1,768)
B)$3,000
C)$634
D)$19,000
E)$45,634

Question

A company is considering the purchase of new equipment for $45,000.The projected annual net cash flows are $19,000.The machine has a useful life of 3 years and no salvage value.Management of the company requires a 12% return on investment.The present value of an annuity of 1 for various periods follows:  What is the net present value of this machine assuming all cash flows occur at year-end?
A)$(1,768) 
B)$3,000 
C)$634 
D)$19,000 
E)$45,634

Quizplus · Accepted Answer

The Answer of A company is considering the purchase of new equipment for $45,000.The projected annual net cash flows are $19,000.The machine has a useful life of 3 years and no salvage value.Management of the company requires a 12% return on investment.The present value of an annuity of 1 for various periods follows:  What is the net present value of this machine assuming all cash flows occur at year-end?
A)$(1,768) 
B)$3,000 
C)$634 
D)$19,000 
E)$45,634

A Company Is Considering the Purchase of New Equipment for $45,000.The