Bing and Associates Inc

question 36

Multiple Choice

Bing and Associates Inc., which uses net present value to analyze investments, requires an 8% minimum rate of return. One of their entry level associates recently calculated a $200,000 machine's net present value to be $34,560, excluding the impact of straight-line depreciation. If Bing and Associates ignores income taxes and the machine is expected to have a four-year service life, the correct net present value of the machine would be:

• A)$34,400
• B)$34,560.
• C)$163,250.
• D)$200,000.
• E)$365,600.

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Definitions:

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Expenses that change in proportion to the activity of a business, such as costs for raw materials that fluctuate with production volume.

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The point at which total revenues equal total costs, resulting in neither profit nor loss.

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A wristwatch with smart capabilities that can be programmed for various functions beyond timekeeping, such as fitness tracking or notifications.