The Snacks Galore is looking to expand its business by adding a new line of vending...

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The Snacks Galore is looking to expand its business by adding a new line of vending machines. The management team is consider

business accounting

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Answer 1

Answer #1

Soda Machine:

Annual depreciation = ($100,000 - $10,000) / 5 years = $18,000

Annual cash inflows = Net income + Annual depreciation

= $30,000 + $18,000 = $48,000

Net present value = Present value of cash inflows + Present value of residual value - Initial investment

= $48,000*3.99271+ $10000*0.68058 - $100,000

= $98,456

Option e. is correct answer.

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Answer 2

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