1)
Current | 1 | 2 | 3 | 4 | 5 | |
Purchase of Machine | $ (43,000.00) | |||||
Reduced Operating cost | $ 9,000.00 | $ 9,000.00 | $ 9,000.00 | $ 9,000.00 | $ 9,000.00 | |
Total Cash flows | $ (43,000.00) | $ 9,000.00 | $ 9,000.00 | $ 9,000.00 | $ 9,000.00 | $ 9,000.00 |
Discount factor (12%) | 1 | 0.893 | 0.797 | 0.712 | 0.636 | 0.567 |
Present Value | $ (43,000.00) | $ 8,037.00 | $ 7,173.00 | $ 6,408.00 | $ 5,724.00 | $ 5,103.00 |
Net present value | $ (10,555.00) |
2)
Item | Cash flow | Years | Total Cash Flows |
Annual cost savings | $ 9,000.00 | 5 | $ 45,000.00 |
Initial investment | $ (43,000.00) | 1 | $ (43,000.00) |
Net cash flow | $ 2,000.00 |
The management of Kunkel Company is considering the purchase of a $43,000 machine that would reduce...
The management of Kunkel Company is considering the purchase of a $33,000 machine that would reduce operating costs by $8,500 per year. At the end of the machine's five-year useful life, it will have zero salvage value. The company's required rate of return is 16%. Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor(s) using table. Required: 1. Determine the net present value of the investment in the machine. 2. What is the difference...
The management of Kunkel Company is considering the purchase of a $32,000 machine that would reduce operating costs by $8,000 per year. At the end of the machine’s five-year useful life, it will have zero salvage value. The company’s required rate of return is 13%. Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor(s) using table. Required: 1. Determine the net present value of the investment in the machine. 2. What is the difference...
The management of Kunkel Company is considering the purchase of a $43,000 machine that would reduce operating costs by $9,000 per year. At the end of the machine's five-year useful life, it will have zero salvage value. The company's required rate of return is 12% Click here to view Exhibit 7B-1 and Exhibit 7B-2, to determine the appropriate discount factor(s) using table. Required: 1. Determine the net present value of the investment in the machine. 2. What is the difference...
The management of Kunkel Company is considering the purchase of a $23,000 machine that would reduce operating costs by $5,000 per year. At the end of the machine's five-year useful life, it will have zero salvage value. The company's required rate of return is 12% Click here to view Exhibit 138-1 and Exhibit 138-2. to determine the appropriate discount factor(s) using table. Required: 1. Determine the net present value of the investment in the machine 2 What is the difference...
The management of Kunkel Company is considering the purchase of a $40,000 machine that would reduce operating costs by $9,500 per year. At the end of the machine’s five-year useful life, it will have zero scrap value. The company’s required rate of return is 13%. Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor(s) using table. Required: 1. Determine the net present value of the investment in the machine. 2. What is...
The management of Kunkel Company is considering the purchase of a $42,000 machine that would reduce operating costs by $9,500 per year. At the end of the machine's five-year useful life, it will have zero salvage value. The company's required rate of return is 118 Click here to view Exhibit 7B-1 and Exhibit 7B-2, to determine the appropriate discount factor(s) using table. Required: 1. Determine the net present value of the investment in the machine. 2. What is the difference...
The management of Kunkel Company is considering the purchase of a $41,000 machine that would reduce operating costs by $9,000 per year. At the end of the machine's five-year useful life, it will have zero salvage value. The company's required rate of return is 12%. Click here to view Exhibit 7B-1 and Exhibit 7B-2, to determine the appropriate discount factor(s) using table. Required: 1. Determine the net present value of the investment in the machine. 2. What is the difference...
The management of Kunkel Company is considering the purchase of a $35,000 machine that would reduce operating costs by $8,500 per year. At the end of the machine's five-year useful life, it will have zero salvage value. The company's required rate of return is 16%. Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using table. Required: 1. Determine the net present value of the investment in the machine. 2. What is the difference...
The management of Kunkel Company is considering the purchase of a $22,000 machine that would reduce operating costs by $5,000 per year. At the end of the machine's five year useful life, it will have zero salvage value. The company's required rate of return is 16% Click here to view Exhibit 7B-1 and Exhibit 7B-2, to determine the appropriate discount factor(s) using table Required: 1. Determine the net present value of the Investment in the machine. 2. What is the...
The management The management of Kunkel Company is considering the purchase of a $43,000 machine that would reduce operating costs by $9,000 per year. At the end of the machine's five-year useful ute, it will have zero scrap value. The company's required rate of retum is 12% Click here to view Exhibit 8B-1 and Exhibit 8B-2, to determine the appropriate discount factor(s) using table. Required: 1. Determine the net present value of the investment in the machine. Net present value...