Question

Joanette, Inc., is considering the purchase of a machine that would cost $480,000 and would last for 8 years, at the end of which, the machine would have a salvage value of $48,000. The machine would reduce labor and other costs by $108,000 per year. Additional working capital of $2,000 would be needed immediately, all of which would be recovered at the end of 8 years. The company requires a minimum pretax return of 17% 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.

Required:

Determine the net present value of the project. (Negative amount should be indicated by a minus sign. Round your intermediate calculations and final answer to the nearest whole dollar amount.)

Answer 1

answer Net present Value ? present Value of cash in flow-present Value of cash outflow (8 lo Boon X 4021+$48000 X 0038+$ 2000 x 0.28) - ($480.000 + 82000* 1) (8454660+ & 13hho+8560)-8482000) $468680 -8 482000 - 13320 % I 1.17 Do it in Caliculatan and press Thank you = button for a times then press for Gross Tokal. I button