Munson Machinery Is Considering the Purchase of a Machine That

Multiple Choice

Munson Machinery is considering the purchase of a machine that will provide a positive cash flow of $26,000 in year 1 and $35,000 in years 2 and 3. The cost of machine disposal is expected to be $1500 at the end of year 3. Munson requires a fourteen percent rate of return on expansion projects of this nature. What is the most Munson should pay for the machine?

A) $72,350
B) $82,479
C) $86,005
D) $94,500