Miles, Inc A)$23,958 Per Year

question 31

Multiple Choice

Miles, Inc. is considering the purchase of a new machine for $600,000 that has an estimated useful life of 5 years and no salvage value. The machine will generate net annual cash flows of $105,000. It is believed that the new machine will reduce downtime because of its reliability. Assume the discount rate is 8%. In order to make the project acceptable, the reduction in downtime must be worth $\begin{array}{lrr}\text { Year } & \text { Present Value } & \text { PV of an Annuity } \\&\text { of } 1 \text { at } 8 \% & \text { of } 1 \text { at } 8 \%\\1 & .926 & .926 \\2 & .857 & 1.783 \\3 & .794 & 2.577 \\4 & .735 & 3.312 \\5 & .681 & 3.993\end{array}$

• A)$23,958 per year.
• B)$49,662 per year.
• C)$18,264 per year.
• D)$45,263 per year.

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Definitions:

Smell

A sense that allows the detection of odors through the nose and is closely linked to memory and emotion.

Vision

The faculty or state of being able to see with the eyes, a complex process involving the interaction of light, eyes, and brain.

Vision

The ability to see; the sense that allows the perception of light, colors, and shapes.

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Infants who are in the initial period after birth, typically considered to be the first few weeks of life.