(Ignore Income Taxes in This Problem

question 19

Multiple Choice

(Ignore income taxes in this problem.) Paragas, Inc., is considering the purchase of a machine that would cost $370,000 and would last for 8 years. At the end of 8 years, the machine would have a salvage value of $52,000. The machine would reduce labor and other costs by $96,000 per year. Additional working capital of $4,000 would be needed immediately. All of this working capital would be recovered at the end of the life of the machine. The company requires a minimum pretax return of 19% on all investment projects.
-The net present value of the proposed project is closest to:

• A) $9,584
• B) $78,530
• C) $22,532
• D) $19,528

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Definitions:

Approval

The formal consent or agreement to something, typically given by an authoritative figure or group.

Narcissistic Personality Disorder

A mental condition characterized by a long-term pattern of exaggerated self-importance, the need for excessive attention and admiration, and a lack of empathy for others.

Inflated Self-Worth

An exaggerated opinion of one's own value, importance, or abilities, often without sufficient evidence.

Collectivistic Culture

Cultures characterized by a strong emphasis on familial and communal ties where the welfare of the group is seen as more important than individual achievements.