Chovita Motors Corp

question 17

Multiple Choice

Chovita Motors Corp. is considering a machine that costs $100,000 that will increase the net income of the company. The net income for the next 3 years is expected to be $30,000, $90,000, and $150,000. The depreciation expense for the next 3 years will be $5,000, $3,000, and $2,000. If the machine has no salvage value and then net present value (NPV) of the project is _____. The expected rate of return is 10%. (Round off the answer to nearest units place.)

• A) $151,669
• B) $175,600
• C) $369,996
• D) $122,878
• E) $250,614

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Definitions:

Income

The revenue brought in, consistently over time, from professional endeavors or investments.

Budget Constraint

The limits imposed on household choices by income, prices, and taxes, defining the combination of goods and services they can afford.

Income

Proceeds obtained, often periodically, from labor or investment returns.

Utility

A measure of satisfaction or happiness that consumers derive from the consumption of goods and services.