The Gypsy Barrell Company is considering the purchase of a new machine costing $500,000. This...
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Accounting
The Gypsy Barrell Company is considering the purchase of a new machine costing $500,000. This machine is estimated to cost $15,000 per year in operating expenses but it will allow the company to earn an additional $120,000 per year in revenues. The machine will be depreciated using the straight-line method over its 10 year life. There is no expected salvage value at the end of its life. If the required rate of return is 15% what is the net present value of this project?
A $92,174
B $(223,966)
C $102,256
D $26,974
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