Avionics Corp

question 79

Multiple Choice

Avionics Corp. is considering the purchase of a new machine for $76,000. The machine would generate an annual cash flow of $23,214 per year for five years. At the end of five years, the machine would have no salvage value. The company's cost of capital is 12 percent. The company uses straight-line depreciation with no mid-year convention. What is the net present value for the machine, assuming no taxes are paid?

• A) $-0-
• B) $7,686
• C) $76,000
• D) $(185,500)

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