Question

The following present value factors are provided for use in this problem.
Periods Present Value Present Value of an of $1 at 8% Annuity of $1 at 8%
1 0.9259 0.9259
2 0.8573 1.7833
3 0.7938 2.5771
4 0.7350 3.3121

Xavier Co. wants to purchase a machine for $37,000 with a four year life and a $1,000 salvage value. Xavier requires an 8% return on investment. The expected year-end net cash flows are $12,000 in each of the four years. What is the machine's net present value (round to the nearest whole dollar)?
A.$3,480
B.$2,745.
C.$40,480.
D.$(3,480).
E.$(2,745).

Answer

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