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Danica Gagnon
on Dec 17, 2024

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The management of Opray Corporation is considering the purchase of a machine that would cost $360,000, would last for 7 years, and would have no salvage value. The machine would reduce labor and other costs by $78,000 per year. The company requires a minimum pretax return of 11% on all investment projects. (Ignore income taxes.) Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using the tables provided.The net present value of the proposed project is closest to:

A) $15,646
B) $89,588
C) $7,536
D) $186,000

Pretax Return

The income or profit of a company before income tax expenses are deducted.

Net Present Value

The contrast in present value between incomes and expenditures of cash across a given time period.

Discount Factor(s)

A multiplier for determining the present value of future cash flows, reflecting the time value of money.

  • Compute and detail the net present value (NPV) of several investment opportunities.
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Nathaniel HehirDec 18, 2024
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