Sullivan Company Is Considering the Purchase of a New Machine

Sullivan Company is considering the purchase of a new machine costing $80,000. Sullivan'smanagement is estimating that the new machine will generate additional cash flows of $12,000 a yearfor ten years and have a salvage value of $3,000 at the end of ten years. What is the machine's netpresent value assuming a discount rate of 8%? Note: Present value tables are needed.

A) $520
B) $1,909
C) $40,000
D) $81,909