The present value of a given future cash flow will increase as the discount rate

Question

The present value of a given future cash flow will increase as the discount rate decreases. True False (Ignore income taxes in this problem. ) Almendarez Corporation is considering the purchase of a machine that would cost $320,000 and would last for 7 years. At the end of 7 years, the machine would have a salvage value of $51,000. By reducing labor and other operating costs, the machine would provide annual cost savings of $72,000. The company requires a minimum pretax return of 18% on all investment projects. The present value of the annual cost savings of $72,000 is closest to: $274,464 $874,298 $504,000 $22,608

Explanation / Answer

b b

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