A company is considering the purchase of new equipment for $45,000. The projected annual net cash flows are $19,000. The machine has a useful life of 3 years and no salvage value. Management of the company requires a 12% return on investment. The present value of an annuity of $1 for various periods follows. Present value of an annuity of $1 at 12% 0.8929 1.6901 2.4018 What is the net present value of this machine (rounded to the nearest whole dollar) assuming all cash flows occur at year-end? Period 1 2 3

A company is considering the purchase of new equipment for $45,000. The projected annual net cash flows are $19,000. The machine has a useful life of 3 years and no salvage value. Management of the company requires a 12% return on investment. The present value of an annuity of $1 for various periods follows. Present value of an annuity of $1 at 12% 0.8929 1.6901 2.4018 What is the net present value of this machine (rounded to the nearest whole dollar) assuming all cash flows occur at year-end? Period 1 2 3

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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