Poe Company is considering the purchase of new equipment costing $80,000.The projected net cash flows are $35,000 for the first two years and $30,000 for years three and four.The revenue is to be received at the end of each year.The machine has a useful life of 4 years and no salvage value.Poe requires a 10% return on its investments.The present value of an annuity of 1 and present value of an annuity for different periods is presented below.Compute the net present value of the machine.
A)$(15,731).
B)$(4,896).
C)$15,731.
D)$4,896.
E)$23,775.

Question

Poe Company is considering the purchase of new equipment costing $80,000.The projected net cash flows are $35,000 for the first two years and $30,000 for years three and four.The revenue is to be received at the end of each year.The machine has a useful life of 4 years and no salvage value.Poe requires a 10% return on its investments.The present value of an annuity of 1 and present value of an annuity for different periods is presented below.Compute the net present value of the machine. 
A)$(15,731). 
B)$(4,896). 
C)$15,731. 
D)$4,896. 
E)$23,775.

Quizplus · Accepted Answer

The Answer of Poe Company is considering the purchase of new equipment costing $80,000.The projected net cash flows are $35,000 for the first two years and $30,000 for years three and four.The revenue is to be received at the end of each year.The machine has a useful life of 4 years and no salvage value.Poe requires a 10% return on its investments.The present value of an annuity of 1 and present value of an annuity for different periods is presented below.Compute the net present value of the machine. 
A)$(15,731). 
B)$(4,896). 
C)$15,731. 
D)$4,896. 
E)$23,775.

Poe Company Is Considering the Purchase of New Equipment Costing