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What the correct net present value of the machine

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Question - Carlin Company, which uses net present value to analyze investments, requires a 8% minimum rate of return. A staff assistant recently calculated a $800,000 machine's net present value to be $96,400, excluding the impact of straight-line depreciation.

FV of 1 (i = 8%, n = 6):1.587

FV of a series of $1 cash flows (i = 8%, n = 6):7.336

PV of $1 (i = 8%; n = 6):0.630

PV of a series of $1 cash flows (i = 8%, n = 6):4.623

If Carlin ignores income taxes and the machine is expected to have a six-year service life, what the correct net present value of the machine?

a. $96,400.

b. $302,700.

c. $765,500.

d. $196,400.

e. $(15,600).

Reference no: EM133039688

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