Question

Assignment Assignment Open Assignment NEXT ВАСK PRINTER VERSION ASSIGNMENT WileyPLUS Problem 13-4 a-b RESOURCES Marinis Corporation is considering buying a brand new machine and has gathered the following data ACC212 Lab #9 Brief Exercise 13.1 $104,100 Investment Exercise 13.16 WileyPLUS Problem 13-7 а-b Brief Exercise 13.6 WileyPLUS Problem 13-4 a-b Estimated life 5 years Estimated annual cash inflows $29,500 Estimated annual cash outflows $10,300 Salvage value for the machine is estimated to be zero Review Score Review Results by Study Objective Click here to view PV table. Calculate the net present value of the machine assuming a 6% discount rate. (If the net present value is negative, use either a negative sign preceding the number eg -45 or parentheses eg (45). For calculation purposes, use 5 decimal places as displayed in the factor table provided, e.g. 1.25124. Round present value answer to 0 decimal places, e.g. 125.) Net Present Value $ Should the company buy the machine based on your results? LINK TO TEXT Further investigation reveals that there would be a sales increase of $7,100 annually as a result of an increase in quality from the customer's perspective and a cost reduction of $2,800 annually as a result of lower warranty claims. Considering these additional facts, calculate the Net Present Value of the machine. (If the net present value is negative, use either a negative sign preceding the number eg -45 or parentheses eg (45). For calculation purposes, use 5 decimal places as displayed in the factor table provided, e.g. 1.25124. Round present value answer to 0 decimal places, e.g. 125.) License Agreement| Privacy Policy 2000-2019 John Wiley & Sons, Inc. All Rights Reserved. A Division of John Wiley & Sons, Inc Version 4.24.17.1

Answer 1

Present value of annuity at 6% for 5 years 4.21236

Net cash flows = Estimated annual cash inflows - Estimated annual cash outflows

= $29,500 - $10,300

= $19,200

Present value of cash inflows = Net cash inflows X Present value of annuity

= $19,200 X 4.21236

= $80,877

Net present value = Present value of cash inflows - Investment

= $80,877 - $104,100

= -$23,223

Net present value -$23,223 (NEGATIVE)

No. The project should not be accepted because the Net present value is negative.