Mr. Bob's Tool Works is considering buying a machine for $2,000. It expects to earn $800 in profits from its use for eac

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Mr Bob S Tool Works Is Considering Buying A Machine For 2 000 It Expects To Earn 800 In Profits From Its Use For Eac 1 (58.01 KiB) Viewed 40 times

Mr. Bob's Tool Works is considering buying a machine for $2,000. It expects to earn $800 in profits from its use for each of the next four years, after which the machine can be sold for scrap in year five for $200. If the interest rate is 7%, should Mr. Bob's Tool Works make the investment or not? Assume that the initial year is t = 0. O A. Since the present value of earnings from the use of the machine and the scrap value exceed the value of the cost of the machine invested for 4 years, Mr. Bob's Tool Works should not make this investment. O B. Since the present value of earnings from the use of the machine and the scrap value does not exceed the value of the cost of the machine invested for 4 years, Mr. Bob's Tool Works should make this investment. O C. Since the present value of earnings from the use of the machine and the scrap value exceed the value of the cost of the machine invested for 4 years, Mr. Bob's Tool Works should make this investment. OD. Since the present value of earnings from the use of the machine and the scrap value does not exceed the value of the cost of the machine invested for 4 years, Mr. Bob's Tool Works should not make this investment