The Following Present Value Factors Are Provided for Use in This

question 154

Multiple Choice

The following present value factors are provided for use in this problem. $$\begin{array} { c c c } \text { Periods } & \text { Presert Value } & \text { Presert Value of an } \\ & \text { of } \$ 1 \text { at } 8 \% & \text { Annuity of } \$ 1 \text { at } 8 \% \\1 & 0.9259 & 0.9259 \\2 & 0.8573 & 1.7833 \\3&0.7938&2.5771\\4 & 0.7938 & 2.5771\end{array}$$ Cliff Co. wants to purchase a machine for $40,000, but needs to earn an 8% return. The expected year-end net cash flows are $12,000 in each of the first three years, and $16,000 in the fourth year. What is the machine's net present value?

• A) $(9,075).
• B) $2,685.
• C) $42,685.
• D) $(28,240).
• E) $52,000.

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