Benz Company Is Considering the Purchase of a Machine That

question 6

Multiple Choice

Benz Company is considering the purchase of a machine that costs $100,000 and has a useful life of 18 years with no salvage value.The company's required discount rate is 12%.If the machine's net present value is $5,850,then the annual cash inflows associated with the machine must be (round to the nearest whole dollar) :

• A) $13,760.
• B) $14,600.
• C) $42,413.
• D) it is impossible to determine from the data given.

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Definitions:

Supporting Service Expenses

Costs incurred by a business or organization for activities that aid the operation but do not directly contribute to the main business activity.

Not-for-Profit Entity

An organization that operates for charitable, educational, cultural, religious, or other purposes serving the public interest, where profitability is not the primary goal.

Supporting Services Expenses

Costs incurred for activities that assist the core operations of a business but do not directly contribute to production.

Journal Entry

A recording in the accounting ledger that represents a single transaction and its effect on the accounts, consisting of at least one debit and one credit.