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XYZ Company is considering the purchase of a new machine. The machine will cost $200,000 and...

XYZ Company is considering the purchase of a new machine. The machine
will cost $200,000 and is expected to last 10 years. However, the
machine will need maintenance costing $25,000 at the end of year three
and at the end of year six. In addition, purchasing this machine would
require an immediate investment of $35,000 in working capital which
would be released for investment elsewhere at the end of the 10 years.
The machine is expected to have a $15,000 salvage value at the end of
10 years. The machine will be used to generate net cash inflows of
$46,000 per year in each of the 10 years. XYZ Company has a cost of
capital of 8% and an income tax rate of 40%.

Calculate the net present value (NPV) of this machine.

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jeff jeffy answered 6 months ago
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