Chovita Motors Corp

Multiple Choice

Chovita Motors Corp. is evaluating a machine that costs $100,000. The machine is expected to generate net income equal to $30,000, $90,000, and $50,000, respectively, during the next three years. The machine's annual depreciation expense will be $5,000, $3,000, and $2,000, respectively. In three years, the machine will have a salvage value equal to zero. What is the machine's net present value (NPV) if the Chovita's required rate of return is 10 percent?

A) $63,550
B) $80,000
C) $247,746
D) $47,746
E) $186,135