Use this information for Wyoming Corporation to answer the question that follow. The management of Wyoming Corporation is considering the purchase of a new machine costing $375,000. The company's desired rate of return is 6%. The present value factor for an annuity of $1 at interest of 6% for five years is 4.212. In addition to the foregoing information, use the following data in determining the acceptability of this investment: Year Income from Operations Net Cash Flow 1 $18,750   $93,750   2 18,750   93,750   3 18,750   93,750   4 18,750   93,750   5 18,750   93,750   The net present value for this investment is a.$19,875 b.$(118,145) c.$118,145 d.$(19,875)

Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 18EB: Garnette Corp is considering the purchase of a new machine that will cost $342,000 and provide the...
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  1. Use this information for Wyoming Corporation to answer the question that follow.

    The management of Wyoming Corporation is considering the purchase of a new machine costing $375,000. The company's desired rate of return is 6%. The present value factor for an annuity of $1 at interest of 6% for five years is 4.212. In addition to the foregoing information, use the following data in determining the acceptability of this investment:


    Year
    Income from
    Operations
    Net Cash
    Flow
    1 $18,750   $93,750  
    2 18,750   93,750  
    3 18,750   93,750  
    4 18,750   93,750  
    5 18,750   93,750  

    The net present value for this investment is
    a.$19,875
    b.$(118,145)
    c.$118,145
    d.$(19,875)
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