Copr., Goed GreenWay is considering investing in a new machine to provide a new residential cleaning service. The machine costs $300,000. The machine has a useful life of 13 years, and the annual depreciation expense would be $20,700. They estimate they can generate $93,300 in annual revenue from the new service. Cash operating expenses are estimated to be $42,000 per year. The machine has an approximate salvage value of $30,000 at the end of its useful life. The company has a 10% minimum rate of return. The net present value for this investment is: O $51,300 $73,084 $(66,150) O $(73,948)

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter9: Capital Budgeting And Cash Flow Analysis
Section: Chapter Questions
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Copr., Goed GreenWay is considering investing in a new machine to provide a new residential
cleaning service. The machine costs $300,000. The machine has a useful life of 13 years,
and the annual depreciation expense would be $20,700. They estimate they can generate
$93,300 in annual revenue from the new service. Cash operating expenses are estimated to
be $42,000 per year. The machine has an approximate salvage value of $30,000 at the end
of its useful life. The company has a 10% minimum rate of return.
The net present value for this investment is:
O $51,300
$73,084
$(66,150)
O $(73,948)
Transcribed Image Text:Copr., Goed GreenWay is considering investing in a new machine to provide a new residential cleaning service. The machine costs $300,000. The machine has a useful life of 13 years, and the annual depreciation expense would be $20,700. They estimate they can generate $93,300 in annual revenue from the new service. Cash operating expenses are estimated to be $42,000 per year. The machine has an approximate salvage value of $30,000 at the end of its useful life. The company has a 10% minimum rate of return. The net present value for this investment is: O $51,300 $73,084 $(66,150) O $(73,948)
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