The following present value factors are provided for use in this problem.
Present Value
Present Value of an
Periods
of $1 at 8%
Annuity of $1 at 8%
1
0.9259
0.9259
2
0.8573
1.7833
3
0.7938
2.5771
4
0.7350
3.3121
Xavier Co. wants to purchase a machine for $37,000 with a four year life and a $1,000
salvage value. Xavier requires an 8% return on investment. The expected year-end net cash
flows are $12,000 in each of the four years. What is the machine's net present value?
? ($3,480).
? ($2,745).
? $40,480.
? $2,745.
$3,480.
