Sturn Corporation Purchased a Machine with an Estimated Useful Life

Multiple Choice

Sturn Corporation purchased a machine with an estimated useful life of seven years. The machine will generate cash inflows of $9,000 each year over the next seven years. If the machine has no salvage value at the end of seven years, if Stutz's discount rate is 10%, and if the net present value of this investment is $17,000 then the purchase price of the machine was closest to:

A) $43,812
B) $26,812
C) $17,000
D) $22,195