Homework Answers
Present value of inflows=cash inflow*Present value of discounting factor(rate%,time period)
=5000/1.13+5000/1.13^2+5000/1.13^3+5000/1.13^4+5000/1.13^5+5000/1.13^6+5000/1.13^7+5000/1.13^8
=$23993.85
NPV=Present value of inflows-Present value of outflows
=23993.85-28000
=-4006.15(Approx)(Negative)
Hence since NPV is negative;machine must be rejected.
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