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A business is considering purchasing a piece of new equipment for $200,000. The equipment will generate the following revenues:  year 1: $50,000 year 2: $50,000 year 3: $50,000 year 4: $60,000 The machine can be sold at the end of the year four for $25,000. Assume a discount of 8%. 1. What is the net present value (NPV)? A.) -7,890.99 B.) 7,899.99 C.) -8,667.61 D.) 9,100.51

A business is considering purchasing a piece of new equipment for $200,000. The equipment will generate the following revenues:  year 1: $50,000 year 2: $50,000 year 3: $50,000 year 4: $60,000 The machine can be sold at the end of the year four for $25,000. Assume a discount of 8%. 1. What is the net present value (NPV)? A.) -7,890.99 B.) 7,899.99 C.) -8,667.61 D.) 9,100.51

Principles of Accounting Volume 2
Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 17EB: Caduceus Company is considering the purchase of a new piece of factory equipment that will cost...
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A business is considering purchasing a piece of new equipment for $200,000. The equipment will generate the following revenues:

 year 1: $50,000

year 2: $50,000

year 3: $50,000

year 4: $60,000

The machine can be sold at the end of the year four for $25,000. Assume a discount of 8%.

1. What is the net present value (NPV)?

A.) -7,890.99

B.) 7,899.99

C.) -8,667.61

D.) 9,100.51

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