Chovita Motors Corp

question 40

Multiple Choice

Chovita Motors Corp. is evaluating a machine that costs $100,000. The machine is expected to generate net income equal to $30,000, $90,000, and $50,000, respectively, during the next three years. The machine's annual depreciation expense will be $5,000, $3,000, and $2,000, respectively. In three years, the machine will have a salvage value equal to zero. What is the machine's net present value (NPV) if the Chovita's required rate of return is 10 percent?

• A)$63,550
• B)$80,000
• C)$247,746
• D)$47,746
• E)$186,135

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Definitions:

Trunnions

The cylindrical protrusions used as a pivot or mounting point, typically on cannons or similar devices, but also in various machinery.

Driveshaft Diameter

the exterior thickness of the driveshaft, which can influence the torque capacity and the overall performance of a vehicle's drivetrain system.

Wall Thickness

The measurement from one inner surface to the outermost surface of a structure, often referring to pipes or structural materials.

Maximum Torque Load

The highest amount of torque a system or component can handle before failing or becoming unstable.