Boston Company is contemplating the purchase of a new machine on which the following information has been gathered:
Cost of the machine $38,900
Annual cash inflows expected $10,000
Salvage value $ 5,000
Life of the machine 6 years
The company's discount rate is 16%, and the machine will be depreciated using the straight-line method. Given these data, the machine has a net present value of:
a) -$26,100.
b) -$23,900.
c) $0.
d) +$26,100.