Carlin Company, Which Uses Net Present Value to Analyze Investments

Multiple Choice

Carlin Company, which uses net present value to analyze investments, requires a 10% minimum rate of return. A staff assistant recently calculated a $500,000 machine's net present value to be $86,400, excluding the impact of straight-line depreciation.

If Carlin ignores income taxes and the machine is expected to have a five-year service life, the correct net present value of the machine would be:

A) $(13,600) .
B) $86,400.
C) $186,400.
D) $292,700.
E) $465,500.