Sturn Corporation Purchased a Machine with an Estimated Useful Life

question 82

Multiple Choice

Sturn Corporation purchased a machine with an estimated useful life of seven years. The machine will generate cash inflows of $9,000 each year over the next seven years. If the machine has no salvage value at the end of seven years, if Stutz's discount rate is 10%, and if the net present value of this investment is $17,000 then the purchase price of the machine was closest to:

• A)$43,812
• B)$26,812
• C)$17,000
• D)$22,195

---

Definitions:

Producers

Organisms, typically plants, that create their own food through photosynthesis, forming the base of the food chain.

Deductive Reasoning

The reasoning that operates from generalities to specifics and can make relationships among data more apparent. Compare with inductive reasoning. See hypothetico-deductive approach.

Premises

Statements or ideas that serve as the basis for an argument or reasoning, often accepted as true to support the conclusion of an argument.

Conclusions

End statements in a document or presentation that summarize the main points or findings.