The management of London Corporation is considering the purchase of a new machine costing $750,000. The company's
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Question:
The management of London Corporation is considering the purchase of a new machine costing $750,000. The company's desired rate of return is 6%. The present value factors for $1 at compound interest of 6% for 1 through 5 years are 0.943, 0.890, 0.840, 0.792, and 0.747, respectively. In addition to this information, use the following data in determining the acceptability in this situation:
Year | Income from Operations | Net Cash Flow | ||
1 | $37,500 | $187,500 | ||
2 | 37,500 | 187,500 | ||
3 | 37,500 | 187,500 | ||
4 | 37,500 | 187,500 | ||
5 | 37,500 | 187,500 |
The net present value for this investment is:
a.negative $118,145.
b.positive $39,750.
c.negative $39,750.
d.positive $118,145.
Related Book For
Engineering Economy
ISBN: 978-0132554909
15th edition
Authors: William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
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