CPA · Question 30 · Area I: Business Analysis
A company purchases a machine for $100,000. It estimates the machine will generate annual cash inflows of $30,000 for 5 years. The company requires a 10% return. The annuity factor for 5 years at 10% is 3.791. What is the Payback Period and the Net Present Value (NPV)?
Answer options:
Payback: 3.33 years; NPV: $13,730
Payback: 3.00 years; NPV: $50,000
Payback: 3.33 years; NPV: $50,000
Payback: 4.00 years; NPV: $13,730
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