Following is the relevant financial data relating to the decision: (For Soda Mac

Question

Following is the relevant financial data relating to the decision: (For Soda Machines, the present value for this scenario is 0.564 and the present value of annuity for this scenario is 4.355. For Snack Machines, the present value for this scenario is 0.351 and the present value of annuity for this scenario is 4.639.) Soda Machines Snack Machines $74,000 S35,000 Investment Useful life (years) Estimated annual net cash inflows for useful life Residual value Depreciation methoo Required rate of return $20,000 $20,000 Straight line 10% $22,000 $6,000 Straight-line 14% What is the net present value for the snack machines? O A. $104,164 B. $(24,380) O C. $63,000 O D. $69,164

Explanation / Answer

Present value of annual net cash inflows 102058 =22000*4.639 Present value of residual value 2106 =6000*0.351 Less: Investment cost -35000 Net present value 69164 Option D is correct

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