(Ignore Income Taxes in This Problem

question 137

Multiple Choice

(Ignore income taxes in this problem.) The management of Melchiori Corporation is considering the purchase of a machine that would cost $310,000, would last for 6 years, and would have no salvage value. The machine would reduce labor and other costs by $116,000 per year. The company requires a minimum pretax return of 16% on all investment projects.
-The net present value of the proposed project is closest to:

• A)$286,179
• B)$386,000
• C)$117,460
• D)$158,431

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Definitions:

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