What is the net present value of this machine assuming all cash flows occur at year-end?
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:
A) $(1,768)
B) $3,000
C) $634
D) $19,000
E) $45,634
C) $634
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