Mcclam, Inc., is considering the purchase of a machine that would cost $100,00 a

Question

Mcclam, Inc., is considering the purchase of a machine that would cost $100,00 and would last for 9 years. At the end of 9 years, the machine would have a salvage value of $23,000. The machine would reduce labor and other costs by $19,000 per year. Additional working capital of $2,000 would be needed immediately. All of this working capital would be recovered at the end of the life of the machine. The company requires a minimum pretax return of 13% on all investment projects. The net present value of the proposed project is closest to: a. $3,833 b. $5,167 c. -$2,492 d. $11,514

Explanation / Answer

you are both wrong the real answer is a) 3,833 sincerely an accounting student who got it right

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