Bendigo Gold Extrusions Corporation Wants to Purchase a New Machine

question 137

Multiple Choice

Bendigo Gold Extrusions Corporation wants to purchase a new machine for its factory operations at a cost of $770 000.The investment is expected to generate $290 000 in annual cash flows for a period of four years.The required rate of return is 14%.The old machine can be sold for $50 000.The machine is expected to have zero value at the end of the four-year period.What is the net present value of the investment? Would the company want to purchase the new machine? Ignore income taxes.

• A)$124 770;yes
• B)$844 770;yes
• C)$69 550;no
• D)$126 750;no

---

Definitions:

Statute of Frauds

A legal principle that requires certain types of contracts to be in writing and signed by the parties involved to be enforceable.

Partial Performance

The act of completing a portion of the obligations outlined in a contract, often considered in legal disputes about contract enforcement.

Respondeat Superior

A rule of law which makes an employer or principal accountable for an employee's or agent's wrongful actions, provided those actions were performed during the course of their employment or agency.

Delegatee

A person or party to whom duties or powers are delegated by another, often in a legal or organizational context.