Munson Machinery Is Considering the Purchase of a Machine That

question 220

Multiple Choice

Munson Machinery is considering the purchase of a machine that will provide a positive cash flow of $26,000 in year 1 and $35,000 in years 2 and 3. The cost of machine disposal is expected to be $1500 at the end of year 3. Munson requires a fourteen percent rate of return on expansion projects of this nature. What is the most Munson should pay for the machine?

• A)$72,350
• B)$82,479
• C)$86,005
• D)$94,500