The management of idaho corporation is considering the purchase of a new machine costing $430,000. the company's desired rate of return is 10%. the present value factors for $1 at compound interest of 10% for 1 through 5 years are 0.909, 0.826, 0.751, 0.683, and 0.621, respectively. in addition to the foregoing information, use the following data in determining the acceptability in this situation:
year income from operations net cash flow
1 $100,000 $180,000
2 40,000 120,000
3 20,000 100,000
4 10,000 90,000
5 10,000 90,000
the net present value for this investment is:
a. negative $126,800
b. negative $99,600
c. positive $16,400
d. positive $25,200

d. positive $25,200

Explanation:

The computation of the Net present value is shown below

= Present value of all yearly cash inflows after applying discount factor - initial investment

The discount factor should be computed by

= 1 ÷ (1 + rate) ^ years

where,  

rate is 10%  

Year = 0,1,2,3,4 and so on

Discount Factor:

Year 1 = 0.909

Year 2 = 0.826

Year 3 = 0.751

Year 4 = 0.683

Year 5 = 0.621

So, the calculation of a Present value of all yearly cash inflows are shown below

= Year 1 cash inflow × Present Factor of Year 1 + Year 2 cash inflow × Present Factor of Year 2 + Year 3 cash inflow × Present Factor of Year 3 + Year 4 cash inflow × Present Factor of Year 4 + Year 5 cash inflow × Present Factor of Year 5

= $180,000 × 0.909 + $120,000 × 0.826 + $100,000 × 0.751 + $90,000 × 0.683 + $90,000 × 0.621

= $163,620 + $99,120 + $75,100 + $61,470 + $55,890

= $455,200

So, the Net present value equals to

= $455,200 - $430,000

= $25,200

explanation: doctrine of respondeat superior is a legal doctrine that is commonly used in tort. this principle makes an employer or principal legally responsible for the wrongful acts done by an employee or agent, if such acts occur within the scope of the employment or agency.

answer; rapid growth in buyer demand and high buyer switching cost;