Use the Information Below to Answer the Following Question(s)

question 25

Multiple Choice

Use the information below to answer the following question(s) .Hawkeye Cleaners has been considering the purchase of an industrial dry-cleaning machine.The existing machine is operable for three more years and will have a zero disposal price.If the machine is disposed of now, it may be sold for $30,000.The new machine will cost $200,000, an additional cash investment in working capital of $60,000 will be required and will be returned at the end of the project.The machine is expected to last 3 years and has an estimated disposal value at that time of $20,000.The new machine will reduce the average amount of time required to wash clothing and will decrease labour costs.The investment is expected to net $50,000 in additional cash inflows during the year of acquisition and $150,000 each additional year of use.These cash flows will generally occur throughout the year and are recognized at the end of each year.Income taxes are not considered in this problem.
-Which of the following results of net present value analyses is the LEAST acceptable?

• A)$(15,000)
• B)$(1,000)
• C)$12,000
• D)$0
• E)$20,000

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Definitions:

Canadian Pension

A retirement plan funded by the government of Canada, designed to provide financial support to its citizens during retirement.

Old Age Security

A government-provided pension plan in several countries designed to provide income support to the elderly.

Guaranteed Income Supplements

Financial assistance programs provided by governments to supplement income for elderly, disabled, or individuals earning below a certain threshold.

Violent Crime

Refers to criminal activities that involve the use or threat of physical force or violence against persons.