A firm is evaluating the purchase of new machinery that requiresan initial investment of $10,000. The cash flows that will resultfrom this investment are presently valued at $11,500. The netpresent value of the investment is:
A. $0
B. –$1,500
C. $1,500
D. $10,000
E. $11,500

Armstrong Bolts, Inc. is considering the purchase of a newmachine that will cost $69.500 with installation. If Armstrongexpects the cash inflows to zero in the first year and then $21,500in the second year, $26,000 in the third year, $23,500 in thefourth year, $18,000 in the fifth year, $12,000 in the sixth year.They can to sell the machine to a salvage dealer for $8,000 at theend of the sixth year. What is the NPV if the cost of capital is11.5%?
A. more than $8,500
B. more than $6,000 but less than $8.500
C. more than $3,500 but less than $6,000
D. more than $1,000 but

You are considering the purchase of an investment that would payyou $2,000 per year for two years and then $3,000 for three years.If you require a 9.5% rate of return, and the cash flows occur atthe end of each year, then how much should you be willing to payfor this investment?
A. more than $10,500
B. more than $9,650 but less than $10.500
C. more than $8,700 but less than $9,650
D. more than $7,850 but less than $8,700
E. less than $7,850