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(Ignore Income Taxes in This Problem

Question 36

Multiple Choice

(Ignore income taxes in this problem.) Cause Company is planning to invest in a machine with a useful life of five years and no salvage value. The machine is expected to produce cash flow from operations of £20,000 in each of the five years. Cause's required rate of return is 10%. The maximum price that the company would pay for the machine would be


A) £32,220.
B) £62,100.
C) £75,820.
D) £122,100.

Correct Answer:

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