Second National Bank Is Considering Adding 5 New ATM Machines

question 32

Multiple Choice

Second National Bank is considering adding 5 new ATM machines.Each machine costs $25,000 and installation costs are $15,000 per machine.Second National Bank expects the new machines to save $0.33 per transaction on 250,000 transactions per year on the new machines.It also expects the new machines to last for 15 years.If the bank needs to earn 14 percent return on this investment,what is the net present value of this investment?

• A)$506,729
• B)$306,729
• C)$272,269
• D)$381,729
• E)$424,228

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Definitions:

Quantities

A measurement or amount of a specific item or variable.

Inventory Planning

The process of determining the optimal quantity and timing of inventory for the purpose of aligning it with sales and production capacity.