Anna Taylor Buys a Machine for Her Business

question 31

Multiple Choice

Anna Taylor buys a machine for her business. The machine costs $150,000. Anna estimates that the machine can produce $40,000 cash inflow per year for the next five years. Her cost of capital is 12 percent. What is the approximate present value of the future cash flow for Anna?

• A) $164,456
• B) $144,192
• C) $184,192
• D) $161,492

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Definitions:

Standard Deviation

A measure of the amount of variation or dispersion in a set of values, calculated as the square root of the variance.

Normally Distributed

Describes a probability distribution that is symmetrical around the mean, showing that data near the mean are more frequent in occurrence than data far from the mean.

Exam Grades

The numerical or letter representations of performance or achievement levels attained by individuals or groups in academic examinations.

Standard Deviation

A measure of the amount of variation or dispersion of a set of values, indicating how much the individual data points differ from the mean of the data.