The Following Present Value Factors Are Provided for Use in This

question 137

Multiple Choice

The following present value factors are provided for use in this problem: $\begin{array}{lll}&\text { Present } \\&\text { Value } & \text { Present Value of an } \\\text { Periods } & \text { of } 1 \text { at } 8 \% & \text { Annuity of } 1 \text { at } 8 \%\\1 & 0.9259 & 0.9259 \\2 & 0.8573 & 1.7833 \\3 & 0.7938 & 2.5771 \\4 & 0.7250 & 32121\end{array}$


Norman 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 (rounded to the nearest whole dollar) ?

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

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