Business, 30.03.2020 16:37 juniorgutierrez997

The management of River Corporation is considering the purchase of a new machine costing $380,000. The company's desired rate of return is 6%. The present value factor for an annuity of $1 at interest of 6% for five years is 4.212. In addition to the foregoing information, use the following data in determining the acceptability of this investment:

Year Income from
Operations Net Cash
Flow
1 $20,000 $95,000
2 20,000 95,000
3 20,000 95,000
4 20,000 95,000
5 20,000 95,000

The net present value for this investment is

a.$19,875

b.$(19,875)

c.$20,140

d.$(20,140)

Answers: 3

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