Asked by Michael Mocan on May 25, 2024
Verified
The net present value of the new system alternative is closest to:
A) $(862,900)
B) $(552,900)
C) $(758,400)
D) $(987,400)
New System Alternative
A proposed solution or technology that aims to replace or improve upon an existing system.
- Familiarize yourself with the approach to evaluate the net present value (NPV) across various projects.
Verified Answer
AN
Afreen NawabMay 25, 2024
Final Answer :
A
Explanation : 
Reference: CH12-Ref11
(Ignore income taxes in this problem.)The management of Opray Corporation is considering the purchase of a machine that would cost $360,000, would last for 7 years, and would have no salvage value.The machine would reduce labor and other costs by $78,000 per year.The company requires a minimum pretax return of 11% on all investment projects.
Reference: CH12-Ref11(Ignore income taxes in this problem.)The management of Opray Corporation is considering the purchase of a machine that would cost $360,000, would last for 7 years, and would have no salvage value.The machine would reduce labor and other costs by $78,000 per year.The company requires a minimum pretax return of 11% on all investment projects.
Learning Objectives
- Familiarize yourself with the approach to evaluate the net present value (NPV) across various projects.