Oriole Industries management is planning to replace some existing machinery in its plant. The cost of...

Oriole Industries management is planning to replace some existing machinery in its plant. The cost of the new equipment and the resulting cash flows are shown in the accompanying table. The firm uses an 18 percent discount rate for projects like this. Should management go ahead with the project?

Year		Cash Flow
0		-$3,278,800
1		956,210
2		894,100
3		1,235,500
4		1,331,060
5		1,523,500

What is the NPV of this project? (Enter negative amounts using negative sign e.g. -45.25. Do not round discount factors. Round other intermediate calculations and final answer to 0 decimal places, e.g. 1,525.)

The NPV is ?

$enter The NPV in dollars rounded to 0 decimal places

"The NPV is ? "

Expert Solution

	i	ii	iii=i*ii
Year	Cash Flow	PVIF @ 18%	Present value
0	($3,278,800)	1.0000	(3,278,800)
1	956,210	0.8475	810,347
2	894,100	0.7182	642,129
3	1,235,500	0.6086	751,963
4	1,331,060	0.5158	686,546
5	1,523,500	0.4371	665,936
			278,121


NPV =			278,121

Since NPV is positive therefore project should be accepted.

jeff jeffy answered 4 months ago

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