In 10 years, Hopkins Company plans to receive $9,000 cash from the sale of a machine that has a $5,000 book value.YearFV of $1 at 8% FV of an ordinary annuity at 8% PV of $1 at 8% PV of an ordinary annuity at 8%1 1.080 1.000 0.926 0.926 2 1.166 2.080 0.857 1.783 3 1.260 3.246 0.794 2.577 4 1.361 4.506 0.735 3.312 5 1.469 5.867 0.681 3.993 6 1.587 7.336 0.630 4.623 If the firm is subject to a 30% income tax rate and has an 8% after-tax hurdle rate, the correct discounted net cash flow would be:
A. $4,167.00.
B. $2,916.90.
C. $4,722.60.
D. $3,611.40.
E. None of the other answers is correct.
Answer: D
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