The Management of Mashiah Corporation Is Considering the Purchase of a Machine

question 54

Multiple Choice

The management of Mashiah Corporation is considering the purchase of a machine that would cost $290,000, would last for 6 years, and would have no salvage value. The machine would reduce labor and other costs by $102,000 per year. The company requires a minimum pretax return of 13% on all investment projects. The net present value of the proposed project is closest to:

• A)$154,663
• B)$322,000
• C)$117,796
• D)$245,246

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Definitions:

Tax Rate

The percentage at which an individual or corporation is taxed by the government.