Question: YOUR ANSWER TO THE SOLUTION SHOULD BE IN NEAREST DOLLAR Your buddy in mechanical engineering has invented a money machine. The main drawback of the

YOUR ANSWER TO THE SOLUTION SHOULD BE IN NEAREST DOLLAR

Your buddy in mechanical engineering has invented a money machine. The main drawback of the machine is that it is slow. It takes one year to manufacture $600. However, once built, the machine will last forever and will require no maintenance. The machine takes one year to built, and it will cost $6,000. Your buddy wants to know if he should invest the money to construct it. If the interest rate is 4.5% per year, what should your buddy do?

To make the decision you need to calculate the net present value (NPV) of the machine.

The NPV of the machine is .................................... (ANSWER SHOULD BE IN NEAREST DOLLAR.)

What should your buddy do? (select the best choice below.) A. Accept the machine because the NPV is equal to or greater than $0. B. Reject the machine because the NPV is less than $0. C. Reject the machine because the NPV is equal to or greater than $0. D. Accept the machine because the NPV is equal to or less than $0.

The answer is .

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

Livingston Corp. purchased printer on January 1, 2018. The company year-end is December 31. The following information is applicable: Cost $5,000 Estimated useful life 4 years Year 2018 2019 2020 2021...

Please answer these questions: You have a loan outstanding. It requires making 4 annual payments at the end of the next 4 years of $2,000 each. Your bank has offered to allow you to skip making the...

a) Your buddy in mechanical engineering has invented a money machine. The main drawback of the machine is that it is slow. It takes one year to manufacture $1300. However, once built, the machine...

(a) Your buddy in mechanical engineering has invented a money machine. The main drawback of the machine is that it is slow. It takes one year to manufacture $1300. However, once built, the machine...

Your buddy in mechanical engineering has invented a money machine. The main drawback of the machine is that it is slow. It takes one year to manufacture $90. However, once built, the machine will...

Your buddy in mechanical engineering has invented a money machine. The main drawback of the machine is that it is slow. It takes one year to manufacture $700. However, once built, the machine will...

Your buddy in mechanical engineering has invented a money machine. The main drawback of the machine is that it is slow. It takes one year to manufacture $300. However, once built, the machine will...

TTC Value UI Money, 325, Fa 20 Save tbook Solu 31 Score: 0 of 1 pt 11 of 14 (9 complete) HW Score: 42.86%, 9 of 21 pts P4-16 (similar to) Question Help Your buddy in mechanical engineering has...

Your buddy in mechanical engineering has invented a money machine. The main drawback of the machine is that it is slow. It takes one year to manufacture $100 However, once built, the machine will...

The following transactions pertain to Boykin Corporation for 2013: Jan. 1 Began operations when the business acquired $25,000 cash from the issue of common stock. Mar. 1 Paid rent for office space...

An interest rate swap has three years of remaining life. Payments are exchanged annually. Interest at 5% is paid and 12-month LIBOR is received. An exchange of payments has just taken place. The...

In the banking crisis of 2 0 0 8 , banks divided their portfolios of mortgages and sold them to other banks and organizations as Blank _ _ _ _ _ _ . Multiple choice question. mortgage - backed...

Which of the following is not a standard or amendment created by the IEEE? Question 4 Answer a . 8 0 2 . 1 x b . 8 0 2 . 1 1 g c . 8 0 2 . 1 1 b d . 8 0 2 . 3 af e . 8 0 2 . 1 1 n