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

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 Whitton Company uses a discount rate of 16%. buy a machine now for $18,000 that will yield cash inflows of $10,000 per year for each of the next three years. The machine would have no salvage value. The net present value of this machine to the nearest whole dollar is:

A) $4,460.
B) $22,460.
C) ($9,980) .
D) $12,000.

Correct Answer:

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