Los Gatos Shop Is Considering the Purchase of a Used

question 90

Multiple Choice

Los Gatos Shop is considering the purchase of a used wide-format printer costing $9,600. The wide-format printer would generate a net cash inflow of $4,000 per year for three years. At the end of three years, the printer would have no salvage value. The company's cost of capital is 10 percent. The company uses straight-line depreciation with no mid-year convention. What is the net present value for the press, assuming no taxes are paid?

• A)$2,400
• B)$9,948
• C)$348
• D)$9,600

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