The Zeron Corporation Wants to Purchase a New Machine for Its

Multiple Choice

The Zeron Corporation wants to purchase a new machine for its factory operations at a cost of $380,000. The investment is expected to generate $225,000 in annual cash flows for a period of four years. The required rate of return is 10%. The old machine can be sold for $30,000. The machine is expected to have zero value at the end of the four-year period. What is the net present value of the investment? Would the company want to purchase the new machine? Income taxes are not considered.

A) $363,025; yes
B) $22,500; no
C) $350,000; yes
D) $375,650; no