Reference: 10-12
Hanley Company Purchased a Machine for $125,000 That

Reference: 10-12
Hanley Company purchased a machine for $125,000 that will be depreciated on the straight-line basis over a five-year period with no salvage value. The related cash flow from operations is expected to be $45,000 a year. These cash flows from operations occur uniformly throughout the year.
-The following data pertain to an investment: $$\begin{array} { | l | l | } \hline \text { Cost of the investment } & \$ 18,955 \\\hline \text { Life of the project } & 5 \text { years } \\\hline \text { Annual cost savings } & \$ 5,000 \\\hline \text { Estimated salvage value } & \$ 1,000 \\\hline \text { Discount rate } & 10 \% \\\hline\end{array}$$ The net present value of the proposed investment is:

A) $3,355.
B) $621.
C) ($3,430) .
D) $0.

Correct Answer:

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