Michener Bottling Corporation is considering the purchase of a new bottling machine.
Michener Bottling Corporation is considering the purchase of a new bottling machine. The machine would cost $200,000 and has an estimated useful life of eight years with zero salvage value. Management estimates that the new bottling machine will provide net annual cash flows of $37,500. Management also believes that the new machine will save the company money because it is expected to be more reliable than other machines, and thus will reduce downtime. Assume a discount rate of 11%.
Calculate the net present value.
How much would the reduction in downtime have to be worth in order for the project to be acceptable?
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Michener Bottling Corporation is considering the purchase of a new bottling machine.
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