Pristine Products Is Considering the Purchase of a New Machine $\begin{array}{cc}\text { Year } & \text { Annual cash flow } \\\hline 1 & \$ 15000 \\2 & \$ 10000 \\3 & \$ 5000 \\4 & \$ 5000\end{array}$

question 16

Multiple Choice

Pristine Products is considering the purchase of a new machine.The estimated cost of the machine is $25 000.The machine is expected to generate annual cash inflows for the next four years as follows:
$\begin{array}{cc}\text { Year } & \text { Annual cash flow } \\\hline 1 & \$ 15000 \\2 & \$ 10000 \\3 & \$ 5000 \\4 & \$ 5000\end{array}$

The machine is not expected to have a residual value at the end of its useful life.If the company uses a discount rate of 12 per cent,what is the expected net present value of the machine? (ignore taxes)

• A) $ 3102
• B) $ 6253
• C) $(2757)
• D) $ 4200

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