Pad 12:34 PM * 87% + Reader View Available Econnect ACCT5103 Spring2018: Z01 bra

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Pad 12:34 PM * 87% + Reader View Available Econnect ACCT5103 Spring2018: Z01 brandon tolbert ACCOUNTING Q3 7&8 instructions help Question 10 (of 12) Save & Exit Submit Time remaining: 0:48:52 10 (Ignore income taxes in this problem.) Tangen Corporation is considering the purchase of a machine that would cost $387,000 and would last for 6 years. At the end of 6 years, the machine would have a salvage value of $83,500. By reducing labor and other operating costs, the machine would provide annual cost savings of $104,700. The company requires a minimum pretax return of 14% on all investment projects. The net present value of the proposed project is closest to Click here to view Exhibit 88-1 and Exhibit 88-2 to determine the appropriate discount factors) using tables. $103.678 O $20178 O $17898 O $58.254

Explanation / Answer

STATEMENT SHOWING NPV Cost Yr PVF Present Value Cost of Machine 387000 0 1 -387000 Salvage Value 83500 6 0.455587 38041.48 Annual Cost Saving 104700 01-06 3.888668 407143.5 NPV 58185.02 ANSWER IS D) 58254, SINCE NPV IS 58185

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