Question

A machine costs $80,000 to purchase and generates an annual revenue of $26,000 with an $8,500 annual cost. Assume that your time value of money (MARR) is 7% annually, and this machine lasts 6 years. What is the Net Future Value of this machine?

Answer 1

$ 5,124.16

working:

Year	Cash flow	Future Value of 1	Future Value of cash flow
a	b	c=1.07^(6-a)	b*c
0	$           -80,000	1.5007	$   -1,20,058.43
1	$             17,500	1.4026	$        24,544.66
2	$             17,500	1.3108	$        22,938.93
3	$             17,500	1.2250	$        21,438.25
4	$             17,500	1.1449	$        20,035.75
5	$             17,500	1.0700	$        18,725.00
6	$             17,500	1.0000	$        17,500.00
Total			$          5,124.16
Working:
Annual Net Income		=	Annual revenue - Annual Expense
		=	$ 26,000	-	$ 8,500
		=	$ 17,500