The management of Penfold Corporation is considering the purchase of a machine that would cost $270,000, would last for 5 years,
and would have no salvage value. The machine would reduce labor and other costs by $60,000 per year. The company requires a minimum pretax return of 12% on all investment projects. The net present value of the proposed project is closest to:______. a. $(11,700).
b. $(53,700).
c. $(269,997).
d. $(113,700).
The stakeholder group with the most power over the organization is the board, whose power is gained through formal positions.
<h3 /><h3>How is the board of directors formed?</h3>
It is formed by the company's owners, investors and shareholders, who occupy the highest hierarchical positions and have the greatest decision-making power over organizational actions.
The distribution of power in a company can motivate employees, because leadership is able to influence positive attitudes.
Therefore, in some companies, there is also the decentralization of functions, generating greater autonomy in the lower hierarchical positions.
For considering the annuity formula we can determinate all the proposed factor:
C represent II the amount of each cash flow
r = represent the discopunt rate
while time or "n" represent the numebr of cashflow we have to calcualte the present value.
The timing refer wether the payment are made at the beginning or end of the period.
When made at the beginning it is an annuity-due
and the (1+r) factor multiplies the previous formula to represent the addtional period of capitalization each cashflow has or the one period less to discount for each cashflwo in cases of prresent value.