Memphis Co

question 37

Multiple Choice

Memphis Co. is going to purchase a machine for $83,200 that will increase cash flows by $40,000 in the first year, $30,000 the second year, and $25,000 the third year. The machine will have no residual value. The minimum rate of return is 10 percent. The present value factors for the three years are 0.909, 0.826, and 0.751, respectively. The machine's net present value is

• A) $21,800.
• B) ($3,285).
• C) $79,915.
• D) ($4,286).

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Definitions:

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