Reids Company,which Uses Net Present Value to Analyze Investments,requires a 10

question 42

Multiple Choice

Reids Company,which uses net present value to analyze investments,requires a 10% minimum rate of return.A staff assistant recently calculated a $500,000 machine's net present value to be $86,400,excluding the impact of straight-line depreciation.If Reids ignores income taxes and the machine is expected to have a five-year service life,the correct net present value of the machine would be:

• A)$(13,600).
• B)$86,400.
• C)$186,400.
• D)$292,700.
• E)$465,500.

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Definitions:

Creating Value

The process through which companies develop products, services, or processes that are valuable to customers, thus enhancing the company's profitability and market position.

Benefits

Advantages or positive outcomes that are provided by a product, service, or job, including tangible and intangible elements.

Needs and Wants

Fundamental human requirements (needs) and desires or wishes that are not essential but desired (wants).

Customer Value

The perception of what a product or service is worth to a customer versus the possible alternatives.