Discount Dollar Store Is Considering the Purchase of a New

question 88

Multiple Choice

Discount Dollar Store is considering the purchase of a new machine costing $220,000.This machine is estimated to generate an additional $88,000 per year in revenues.The machine will be depreciated using the straight-line method over its 4-year life.There is no expected salvage value at the end of its life.Expected annual net cash flows are $67,240 and expected annual net income from the new machine total $12,240.The required rate of return is 8% and the income tax rate is 28%.How much is the net present value of this project?

• A)$2,706
• B)($179,460)
• C)$71,465
• D)$153,390

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The feeling of pleasure or satisfaction experienced when engaging in an activity one likes or finds rewarding.

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