our friend in mechanical engineering has invented a money machine. The main drawback of the machine is that it is slow. It takes one year to manufacture $700. However, once built, the machine will last forever and will require no maintenance. The machine can be built immediately, but it will cost $7,000 to build. Your friend wants to know if he should invest the money to construct it. If the interest rate is 13.0% per year, what should your friend do? Question content area bottom Part 1 The NPV of the machine is $enter your response here. (Round to the nearest cent.) Part 2 What should your friend do? (Select the best choice below.) A. Accept the machine because the NPV is equal to or less than $0. B. Reject the machine because the NPV is equal to or greater than $0. C.Reject the machine because the NPV is less than $ 0. Reject the machine because the NPV is less than $0. D.Accept the machine because the NPV is equal to or greater than $ 0.
our friend in mechanical engineering has invented a money machine. The main drawback of the machine is that it is slow. It takes one year to manufacture $700. However, once built, the machine will last forever and will require no maintenance. The machine can be built immediately, but it will cost $7,000 to build. Your friend wants to know if he should invest the money to construct it. If the interest rate is 13.0% per year, what should your friend do? Question content area bottom Part 1 The NPV of the machine is $enter your response here. (Round to the nearest cent.) Part 2 What should your friend do? (Select the best choice below.) A. Accept the machine because the NPV is equal to or less than $0. B. Reject the machine because the NPV is equal to or greater than $0. C.Reject the machine because the NPV is less than $ 0. Reject the machine because the NPV is less than $0. D.Accept the machine because the NPV is equal to or greater than $ 0.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
Your friend in mechanical engineering has invented a money machine. The main drawback of the machine is that it is slow. It takes one year to manufacture
$700.
However, once built, the machine will last forever and will require no maintenance. The machine can be built immediately, but it will cost
$7,000
to build. Your friend wants to know if he should invest the money to construct it. If the interest rate is
13.0%
per year, what should your friend do?Question content area bottom
Part 1
The NPV of the machine is
$enter your response here.
(Round to the nearest cent.) Part 2
What should your friend do? (Select the best choice below.)
Accept the machine because the NPV is equal to or less than $0.
Reject the machine because the NPV is equal to or greater than $0.
Reject the machine because the NPV is less than $0.
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