The management of KC Company is considering the purchase of a $27.000 machine that would reduce operating costs by $7,000 per year. At the end of the machine's five-year useful life, it will have zero scrap value. The company's required rate of return is 12%. Determine the net present value of the investment in the machine. look for the attachment CHOICES: a) 30,917.8 b) 30,458.65 c) 29,352.6
The management of KC Company is considering the purchase of a $27.000 machine that would reduce operating costs by $7,000 per year. At the end of the machine's five-year useful life, it will have zero scrap value. The company's required rate of return is 12%. Determine the net present value of the investment in the machine. look for the attachment CHOICES: a) 30,917.8 b) 30,458.65 c) 29,352.6
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The management of KC Company is considering the purchase of a $27.000 machine that would reduce operating costs by $7,000 per year. At the end of the machine's five-year useful life, it will have zero scrap value. The company's required
Determine the
look for the attachment
CHOICES:
a) 30,917.8
b) 30,458.65
c) 29,352.6
Transcribed Image Text:Table A-3 Present Value Interest Factors for One Dollar Discounted at k Percent for
Period
1%
2%
3%
6%
0.9615 09524 0.9434
0.8900
4%
7%
12%
0.9174 0.9091 0.9009 0.8929
10%
11%
13%
0.9804
0.9709
0.9426
1
0.9901
0.9346
0.8734
0.9259
0.8850
0.7972 0.7831
0.9803
0.9612
0.9246 0.9070
0.8573
0.8417
0.824
0.7513
0.8116
3
0.9706
0.9423
0.9151
0.8890
0.8396
08163
0.7938
0.7722
0.7312
0.7118
0.6931
4
0.9610
0.9238
0.8885
0.8548
0.8227
0.7921
0.7629
0.7350
0.7084
0.6830
0.6587
0.6355
0.6133
0.9515
0.9067
0.8626
0.0219
0.7835
0.7473
0.7130
0.6806
0.6499
0.6209
0.5935
0.5674
0.5428
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