Asked by Hikkmatjit Saini on May 14, 2024
Verified
The net present value of the proposed project is closest to:
A) $9,584
B) $78,530
C) $22,532
D) $19,528
Net Present Value
A method used to evaluate the profitability of an investment, calculating the difference between the present value of cash inflows and outflows over a period.
- Discern the techniques for determining the net present value (NPV) of several types of projects.
Verified Answer
RS
Raimon SalimMay 20, 2024
Final Answer :
D
Explanation : 
Reference: CH12-Ref13
(Ignore income taxes in this problem.)Almendarez Corporation is considering the purchase of a machine that would cost $320,000 and would last for 7 years.At the end of 7 years, the machine would have a salvage value of $51,000.By reducing labor and other operating costs, the machine would provide annual cost savings of $72,000.The company requires a minimum pretax return of 18% on all investment projects.
Reference: CH12-Ref13(Ignore income taxes in this problem.)Almendarez Corporation is considering the purchase of a machine that would cost $320,000 and would last for 7 years.At the end of 7 years, the machine would have a salvage value of $51,000.By reducing labor and other operating costs, the machine would provide annual cost savings of $72,000.The company requires a minimum pretax return of 18% on all investment projects.
Learning Objectives
- Discern the techniques for determining the net present value (NPV) of several types of projects.