Lo 3 chad's chocolates is considering the purchase of a new candy press. the machine under consideration costs $17,550 and would generate $2,650 in annual savings of direct labor costs over its 20-year life. at the end of 20 years, the press could be sold for $500. chad's required rate of return is 16%. what is the machine's net present value?
a) $1,813
b) $(1,813)
c) $(1,839)
d) $(1,339)

B) $(1,813)

Explanation:

Initial investment = 17,550

Annual cashflows = 2,650

Terminal Cashflow = 500

You can solve for NPV using financial calculator with the following inputs;

CF0= -17,550

C01 = 2,650

F01 (Frequency) = 19

C02 = 2,650 + 500 = 3,150

I=16%

Net present value; NPV = -1,812.879 or -1,813 rounded off to the nearest whole number.

hi there, i would say your answer is:

b. there is a fixed quantity of resources and technology available.

hope that : )

answer; at prices that violate government price regulations;