Question
In: Finance
Your company is deciding whether to invest in a new machine. The new machine will increase...
Your company is deciding whether to invest in a new machine. The
new machine will increase cash flow by $330,000 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 $102,000 per
year until it reaches $1,190,000, where it will remain.
a. If your required return is 14 percent, calculate the NPV if you
purchase the machine today.
b. If your required return is 14 percent, calculate the NPV if you
wait to purchase the machine until the indicated year.
| NPV | |
| Year 1 | $ |
| Year 2 | $ |
| Year 3 | $ |
| Year 4 | $ |
| Year 5 | $ |
| Year 6 | $ |
Solutions
jeff jeffy answered 2 weeks agoRelated Solutions
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Your company is deciding whether to invest in a new machine. The new machine will increase...
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other words, no matter when you purchase the machine, it will be
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year until it reaches $1,170,000, where it will remain.
If your...
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