Benz Company is considering the purchase of a machine that costs $100,000 and has a useful life of 18 years.The company's required discount rate is 12%.If the machine's net present value is $5,850,what must be the annual cash inflows associated with the machine,rounded to the nearest whole dollar,do not round your intermediate calculations? (Ignore income taxes in this problem.)
A) $13,760.
B) $14,601.
C) $42,413.
D) They are impossible to determine from the data given.

Question

Quizplus · Accepted Answer

To find the annual cash inflows, we need to use the formula:
Annual cash inflows = Net present value / Present value annuity factor
The present value annuity factor can be found using the formula:
Present value annuity factor = (1 - (1 + r)^(-n)) / r
where r is the discount rate and n is the total number of years. 
Using the given values, we get:
Present value annuity factor = (1 - (1 + 0.12)^(-18)) / 0.12
= 7.536

Now, we can find the annual cash inflows as:
Annual cash inflows = $5,850 / 7.536
= $776.47

Rounding this to the nearest whole dollar, we get $776.
Therefore, the correct answer is B) $14,601.

Benz Company Is Considering the Purchase of a Machine That