Sigma Is Thinking About Purchasing a New Clam Digger for $14,000.The

question 46

Multiple Choice

Sigma is thinking about purchasing a new clam digger for $14,000.The expected net cash flows resulting from the digger are $9,000 in year 1, $7,000 in the 2nd year, $5,000 in the 3rd year, and $3,000 in the 4th year.Should Sigma purchase this digger if its cost of capital is 12 percent?

• A)Yes, NPV = $3,176
• B)Yes, NPV = $5,084
• C)Yes, NPV = $16,605
• D)Yes, NPV = $19,084

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