Allen Ltd is considering a project with a three-year life producing the following costs and revenues: Identify
Question:
Allen Ltd is considering a project with a three-year life producing the following costs and revenues:
Identify which of the following is closest to the net present value of the machine:
A. $(\$ 13,000)$
B. $(\$ 11,380)$
C. $\$ 11,610$
D. $\$ 22,370$
Transcribed Image Text:
$ Cost of machine Depreciation of machine (for three years) Residual value of machine 100,000 20,000 p.a. 40,000 Annual cost of direct labour 20,000 Annual charge for foreman (10% apportionment) 5,000 Annual cost of components required 18,000 Annual net revenues from machine 80,000 Cost of capital 20%
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