1 | Net Present Value | = | $ -4,975 | ||
2 | Total difference in undiscounted cash inflows and outflows | = | $ 2,000 | ||
Workings: | |||||
1 | Year | Value Flows | Present Factor @ 12% | Present Value | |
Initial Cost | 0 | $ -23,000 | 1 | $ -23,000 | |
Reduction in cost | 1 - 5 | $ 5,000 | 3.605 | $ 18,025 | |
Net Present Value | $ -4,975 | ||||
2 | Total difference in undiscounted cash inflows and outflows | ||||
Cash Inflows ($5000 X 5 years) | = | $ 25,000 | |||
Cash Outflows | = | $ 23,000 | |||
Difference | = | $ 2,000 |
The management of Kunkel Company is considering the purchase of a $23,000 machine that would reduce...
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 $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 $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 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 $39,000 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 11%. 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 between the total, undiscounted...
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 $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 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 $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 $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 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 $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...