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    NPV of George William's machine

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    George William buys a machine for his business. The machine costs $150,000. George estimates that the machine can produce $40,000 cash inflow per year for the next 5 years. George's cost of capital is 10%. What is the approximate net present value?

    A. $1,632.
    B. $16,796.
    C. $24,212.
    D. $31,632.

    Anna Taylor buys a machine for her business. The machine costs $150,000. Anna estimates that the machine can produce $40,000 cash inflow per year for the next 5 years. Her cost of capital is 12%. Based upon the net present value of this investment, Anna should:

    A. invest in the machine.
    B. invest in the machine if she can get a higher cost of capital.
    C. not invest in the machine.
    D. cannot tell without additional information

    What are prime mortgages? What are near prime mortgages (Alt A)? What are subprime loans?

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    Solution Preview

    Please find the file attached.

    As per investopedia, "A subprime mortgage is a type of loan granted to individuals with poor credit histories (often below 600), who, as a result of their deficient credit ratings, would not be able to qualify for conventional mortgages. Because subprime borrowers present a higher risk for lenders, subprime mortgages charge interest rates above the ...

    Solution Summary

    Response provides the steps to compute the NPV of George William's machine

    $2.19

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