Net Present Value = Present Value of Cash Inflow - Present Value of Cash Outflow
If Net Present Value is positive, we should accept the project and if it is negative, we should reject the project.
Please find screenshot of excel files attached below for your kind reference.
Formula View:
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A division of Sunland Manufacturing is considering purchasing for $1,680,000 a machine that automates the process...
A division of Crane Manufacturing is considering purchasing for $1,830,000 a machine that automates the process of inserting electronic components onto computer motherboards. The annual cost of operating the machine will be $61,000, but it will save the company $451,000 in labor costs each year. The machine will have a useful life of 10 years, and its salvage value in 10 years is estimated to be $366,000. Straight-line depreciation will be used in calculating taxes for this project, and the...
A division of Ivanhoe Manufacturing is considering purchasing for $1,560,000 a machine that automates the process of inserting electronic components onto computer motherboards. The annual cost of operating the machine will be $52,000, but it will save the company $385,000 in labor costs each year. The machine will have a useful life of 10 years, and its salvage value in 10 years is estimated to be $312,000. Straight-line depreciation will be used in calculating taxes for this project, and the...
A division of Ivanhoe Manufacturing is considering purchasing for $1,560,000 a machine that automates the process of inserting electronic components onto computer motherboards. The annual cost of operating the machine will be $52,000, but it will save the company $385,000 in labor costs each year. The machine will have a useful life of 10 years, and its salvage value in 10 years is estimated to be $312,000. Straight-line depreciation will be used in calculating taxes for this project, and the...
Larson Manufacturing is considering purchasing a new injection-molding machine for $250,000 to expand its production capacity. It will cost an additional $20,000 to do the site installed. With the new injection-molding machine installed, Larson Manufacturing expects to increase its revenue by $90,000 per year. The machine will be used for five years, with an expected salvage value of $75,000. a. Compute the NPV of the project at an interest rate of 12% . b. Based on NPV, would the purchase...
Daily Enterprises is purchasing a $10.43 million machine. It will cost $70,093.00 to transport and install the machine. The machine has a depreciable life of five years using the straight-line depreciation and will have no salvage value. The machine will generate incremental revenues of $4.28 million per year along with incremental costs of $1.50 million per year. Daily's marginal tax rate is 35.00%. The cost of capital for the firm is 13.00%. (answer in dollars. so convert millions to dollars)...
Self-Study Problem 10.03 a1-a2 (Part Level Submission) Sunland Corp. management is considering purchasing a machine that will cost $117,250 and will be depreciated on a straight-line basis over a five-year period. The sales and expenses (excluding depreciation) for the next five years are shown in the following table. The company’s tax rate is 34 percent. Year 1 Year 2 Year 3 Year 4 Year 5 Sales $123,450 $181,875 $240,455 $258,440 $267,125 Expenses $143,410 $124,488 $146,289 $138,112 $137,556 Sunland will accept...
Sunland Corp. is considering purchasing one of two new processing machines. Either machine would make it possible for the company to produce its products more efficiently than it is currently equipped to do. Estimates regarding each machine are provided below. Machine A Machine B Original cost $113,200 $269,600 Estimated life 10 years 10 years Salvage value Estimated annual cash inflows $29,800 $60,300 Estimated annual cash outflows $7,600 $15.000 Calculate the net present value and profitability index of each machine. Assume...
Daily Enterprises is purchasing a $10.57 million machine. It will cost $59,244.00 to transport and install the machine. The machine has a depreciable life of five years using the straight-line depreciation and will have no salvage value. The machine will generate incremental revenues of $4.31 million per year along with incremental costs of $1.20 million per year. Daily’s marginal tax rate is 34.00%. The cost of capital for the firm is 10.00%. (answer in dollars..so convert millions to dollars) A)...
Larson Manufacturing is considering purchasing a new injection-molding machine for $270,000 to expand its production capacity. It will cost an additional $20,000 to do the site preparation. With the new injection-molding machine installed, Larson Manufacturing expects to increase its revenue by $87,000 per year. The machine will be used for six years, with an expected salvage value of $75,000. At an interest rate of 10%, would the purchase of the injection-molding machine be justified? The present worth of the project...
Management of Franklin Mints, a confectioner, is considering purchasing a new jelly bean-making machine at a cost of $353,558. They project that the cash flows from this investment will be $150,100 for the next seven years. If the appropriate discount rate is 14 percent, what is the IRR that Franklin Mints management can expect on this project? (Round answer to 2 decimal places, e.g. 5.25%.) Champlain Corp. management is investigating two computer systems. The Alpha 8300 costs $2,677,625 and will...