The Zeron Corporation wants to purchase a new machine for its factory operations at a cost of $950,000

ACCOUNTING

Multiple Choice

The Zeron Corporation wants to purchase a new machine for its factory operations at a cost of $950,000. The investment is expected to generate $350,000 in annual cash flows for a period of four years. The required rate of return is 14%. The old machine can be sold for $50,000. The machine is expected to have zero value at the end of the four-year period. What is the net present value of the investment? Would the company want to purchase the new machine? Income taxes are not considered.

a. $119,550; yes

b. $69,550; no

c. $1,019,550; yes

d. $326,750; no

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