You are interested in buying a vending machine for $4,000 and placing it at a friend's...
You are interested in buying a vending machine for $4,000 and placing it at a friend's business. If the present value of all future expected cash inflows (net of costs) from this vending machine is $4,500, what is the net present value of this purchase to you?
A
Negative $500
B
Positive $500
C
$4,500
D
Not enough information to answer
Homework Answers
The net present value is computed as shown below:
Net present value = Initial investment + Present value of future cash flows
= - $ 4,000 + $ 4,500
= $ 500
So, the correct answer is option B.
Feel free to ask in case of any query relating to this question
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