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  3. a project requires a $42,000 initial investment an

A project requires a $42,000 initial investment and is expected to generate end-of-period annual cash...

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Accounting

A project requires a $42,000 initial investment and is expected to generate end-of-period annual cash inflows of $19,000 for each of three years. Assuming a discount rate of 14%, what is the net present value of this investment? Selected present value factors for a single sum are shown in the table below:

i = 14% i = 14% i = 14%
n = 1 n = 2 n = 3
0.8772 0.7695 0.6750

Multiple Choice

  • $0

  • $4,206

  • $(15,438)

  • $2,112

  • $44,112

Butler Corporation is considering the purchase of new equipment costing $69,000. The projected annual income from the equipment is $2,500, after deducting $23,000 for depreciation. The revenue is to be received at the end of each year. The machine has a useful life of 3 years and no salvage value. Butler requires a 9% return on its investments. The present value of an annuity of $1 for different periods follows:

Periods 9%
1 0.9174
2 1.7591
3 2.5313
4 3.2397

What is the net present value of the machine (rounded to the nearest whole dollar)?

rev: 04_15_2022_QC_CS-303098

Multiple Choice

  • $58,220.

  • $(4,452).

  • $69,000.

  • $64,548.

  • $2,500.

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