A machine costs $25,000; it is expected to generate annual cash revenues of $8,000 and annual cash expenses of $2,000 for five years. The required rate of return is 12%. FV of 1 (i = 12%, n = 5):1.762FV of a series of $1 cash flows (i = 12%, n = 5):6.353PV of $1 (i = 12%; n = 5):0.567PV of a series of $1 cash flows (i = 12%, n = 5):3.605The net present value of the machine is:
A. $28,840.
B. $21,630.
C. $(3,840).
D. $(3,370).
E. $0.
Answer: D
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