Almendarez Corporation is considering the purchase of a machine that would cost $200,000 and would last...
Almendarez Corporation is considering the purchase of a machine that would cost $200,000 and would last for 5 years. At the end of 5 years, the machine would have a salvage value of $20,000. By reducing labor and other operating costs, the machine would provide annual cost savings of $44,000. The company requires a minimum pretax return of 8% on all investment projects. (Ignore income taxes.)
Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using the tables provided.
The net present value of the proposed project is closest to: (Round your intermediate calculations and final answer to the nearest whole dollar amount.)
Homework Answers
| Answer |
|
Net present value = Present value of cash inflow-Present value of Cash outflow |
| (44000*3.9927+20000*0.6805)-200000 |
| Net present value = $ -10,711 |
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