Linex Corporation Is Considering the Purchase of a New Machine

question 52

Multiple Choice

Linex Corporation is considering the purchase of a new machine that costs $18,000, has an expected useful life of 10 years, and has no salvage value. Linex estimates that the machine will save the company $3,000 per year over the 10-year life. The company's hurdle rate is 12%. The present value annuity factors of 10, 12, and 14% for 10 years are 6.145, 5.650, and 5.216, respectively, and the present value of $1 discounted for 10 years at 12% is 0.322. Given the data provided, the net present value of the machine is:

• A) $435
• B) $(1,050)
• C) $(2,358)
• D) $(8,340)

---

Definitions:

Developed Nation

Refers to a sovereign state that has a highly developed economy and advanced technological infrastructure relative to other nations.

Well-Nourished Child

A child who receives adequate nutrition for proper growth and development.

Educational Program

A planned sequence of courses and experiences designed to meet learning objectives and educational goals.

North American

Pertaining to or originating from North America, a continent that includes Canada, the United States, Mexico, and Greenland among others.