Sam Is Considering the Purchase of a Vending Machine to Sell

Multiple Choice

Sam is considering the purchase of a vending machine to sell sodas. The cost of the vending machine is $3,400. Sam estimates that the vending machine will last for five years and will provide net income of $800 each year for its lifetime. If Sam pays $3,400 for the vending machine today, the net present value at 5% is $____.

A) 63.58
B) 409.52
C) 3,463.58
D) 53.34