Lynch Corporation bought a piece of machinery. Selected data is presented below: Useful life 8 years Yearly net cash inflow $48,000 Salvage value - 0 - Internal rate of return 16% Cost of capital 13% Present value tables or a financial calculator are required. The initial cost of the machinery was
a. $201,496
b. $208,493
c. $215,390
d. $230,342
B
Use PV of Annuity for 8 years and 16%
$48,000 * 4.3436 = $208,493
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