A Machine Costs $10,000, Has a Three-Year Life, and Has

question 113

Multiple Choice

A machine costs $10,000, has a three-year life, and has an estimated salvage value of $1000. It will generate after-tax annual cash flows (ACF) of $6000 a year, starting next year. If your required rate of return for the project is 10%, what is the NPV of this investment? (Round your answer to the nearest $1.00.)

• A) $9,000
• B) $5,672
• C) $5,157
• D) -$1,500

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