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Poe Company Is Considering the Purchase of New Equipment Costing

question 133

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Poe Company is considering the purchase of new equipment costing $80,000.The projected net cash flows are $35,000 for the first two years and $30,000 for years three and four.The revenue is to be received at the end of each year.The machine has a useful life of 4 years and no salvage value.Poe requires a 10% return on its investments.The present value of an annuity of 1 and present value of an annuity for different periods is presented below.Compute the net present value of the machine. Poe Company is considering the purchase of new equipment costing $80,000.The projected net cash flows are $35,000 for the first two years and $30,000 for years three and four.The revenue is to be received at the end of each year.The machine has a useful life of 4 years and no salvage value.Poe requires a 10% return on its investments.The present value of an annuity of 1 and present value of an annuity for different periods is presented below.Compute the net present value of the machine.   A) $(15,731) . B) $(4,896) . C) $15,731. D) $4,896. E) $23,775.


Definitions:

Offline Programming

The practice of creating and testing programs for automated systems without directly interacting with the physical machinery.

Machine Operation

The process or action that a machine performs, often dictated by programming or mechanical design, to carry out its intended function.

Metal Oxide Varistor

A Metal Oxide Varistor (MOV) is an electronic component used to protect circuits against excessive transient voltages by diverting the energy.

AC Voltages

Alternating Current voltages, which periodically reverse direction, commonly used in power supply systems and electrical appliances.

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