A company is considering the purchase of new equipment for $45,000. The projected annual net cash flows are $19,000. The machine has a useful life of 3 years and no salvage value. Management of the company requires a 12% return on investment. The present value of an annuity of $1 for various periods follows: PeriodPresent value of an annuity of $1 at 12%10.892921.690132.4018 What is the net present value of this machine assuming all cash flows occur at year-end?
A. $634
B. $45,634
C. $(1,768)
D. $19,000
E. $3,000
Answer: A
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