Question

Your company is deciding whether to invest in a new machine. The new machine will increase cash flow by $329,000 per year. You believe the technology used in the machine has a 10-year life; in other words, no matter when you purchase the machine, it will be obsolete 10 years from today. The machine is currently priced at $1,700,000. The cost of the machine will decline by $100,000 per year until it reaches $1,200,000, where it will remain.

  

If your required return is 14 percent, calculate the NPV today. NPV =

If your required return is 14 percent, calculate the NPV if you wait to purchase the machine until the indicated year. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

Year 1	$23,996.78
Year 2	$20,149.45
Year 3	$7,324.99
Year 4
Year 5
Year 6

Answer 1