The dean of the school of natural science is trying to

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The dean of the School of Natural Science is trying to decide whether to purchase a copy machine to place in the lobby of the building. The machine would add to student convenience, but the dean feels compelled to earn an 8 percent return on the investment of funds. Estimates of cash inflows from copy machines that have been placed in other university buildings indicate that the copy ma- chine would probably produce incremental cash inflows of approximately $15,000 per year. The machine is expected to have a three-year useful life with a zero salvage value.

Required

a. Use Present Value Table 1 in the chapter's Appendix to determine the maximum amount of cash the dean should be willing to pay for a copy machine.

b. Use Present Value Table 2 in the chapter's Appendix to determine the maximum amount of cash the dean should be willing to pay for a copy machine.

c. Explain the consistency or lack of consistency in the answers to Requirements a and b.

Reference no: EM13571894

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