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Poe Company is considering the purchase of new equipment costing $87,500. The...

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Accounting

Poe Company is considering the purchase of new equipment costing $87,500. The projected net cash flows are $42,500 for the first two years and $37,500 for years three and four. The revenue is to be received at the end of each year. The machine has a useful life of 4 years and no salvage value. Poe requires a 10% return on its investments. The present value of an annuity of $1 and present value of an annuity of $1 for different periods is presented below. Compute the net present value of the machine (rounded to the nearest whole dollar).
Periods Present Value of $1 at 10% Present Value of an Annuity of $1 at 10%
10.90910.9091
20.82641.7355
30.75142.4869
40.68303.1699

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