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Really need help with this, round to 2 decimals please "Caspian Sea Drinks is considering buying the J-Mix 2000. It will...

Really need help with this, round to 2 decimals please

"Caspian Sea Drinks is considering buying the J-Mix 2000. It will allow them to make and sell more product. The machine cost $1.38 million and create incremental cash flows of $747,897.00 each year for the next five years. The cost of capital is 8.70%. What is the net present value of the J-Mix 2000?"

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Answer #1

Net present value = Present value of cash inflows - present value of cash outflows

Net present value = Annuity * [1 - 1 / (1 + r)n] / r - Initial investment

Net present value = 747,897 * [1 - 1 / (1 + 0.087)5] / 0.087 - 1,380,000

Net present value = 747,897 * [1 - 0.65895] / 0.087 - 1,380,000

Net present value = 747,897 * 3.920118 - 1,380,000

Net present value = $1,551,844.59

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