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Compute the net present value of the investment in machine

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Reference no: EM132010136

Question - The Sanchaz Corporation is considering the purchase of a new machine that will cost the company $24,000 and will be worth nothing at the end of three years. Their current tax rate is 20% and they will depreciate the machine $8,000 each year for three years. The machine is expected to generate $8,500 of cash inflows each year over the next 3 years. Sanchaz Corporation's cost of capital is 4%. The net present value of the investment in the machine is:

a. $23,311

b. $(6,689)

c. $17,761

d. $(12,240)

e. $(689)

Reference no: EM132010136

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