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Reed Is Interested in Purchasing a Machine for His Business

Question 22

Multiple Choice

Reed is interested in purchasing a machine for his business that costs $10,000. The machine would be used for three years and generate $4,000 per year of cash flow. After three years, the machine could be sold for $3,000. What is the net present value of the machine at 12%?


A) $1,742.67
B) $3,200.23
C) $2,012.18
D) $4,158.40

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