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Cornerstones of Cost Management 2nd Edition by Don Hansen ,Maryanne Mowen
Edition 2ISBN: 978-1111824402Cornerstones of Cost Management 2nd Edition by Don Hansen ,Maryanne Mowen
Edition 2ISBN: 978-1111824402 Exercise 26
(2011 CPA Exam, adapted) A corporation is considering purchasing a machine that costs $100,000 and has a $20,000 salvage value. The machine will provide net annual cash inflows of $25,000 per year and has a sixyear life. The corporation uses a discount rate of 10%. The discount factor for the present value of a single sum six years in the future is 0.564. The discount factor for the present value of an annuity for six years is 4.355. What is the net present value of the machine?
A) ($2,405)
B) $8,875
C) $20,155
D) $28,875
A) ($2,405)
B) $8,875
C) $20,155
D) $28,875
Explanation
Verified
Verified
The net present value (NPV) is the prese...
Cornerstones of Cost Management 2nd Edition by Don Hansen ,Maryanne Mowen
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