What is the net present value of this machine assuming

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40] A company is considering the purchase of new equipment for $90,000. The projected annual net cash flows are $35,500. 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:

Periods

Present value of an annuity of 1 at 12%

1

0.8929

2

1.6901

3

2.4018

What is the net present value of this machine assuming all cash flows occur at year-end?

$30,000

$4,500

$(4,736)

$34,500

$82,862

 


Reference no: EM131022279

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