A new machine will cost $25,000. The machine is expected to last 4 years and has no

Question:

A new machine will cost $25,000. The machine is expected to last 4 years and has no salvage value. If the interest rate is 12%, determine the return and the risk associated with the purchase.

0.3 0.3 0.3 0.4 P Annual savings $9500 $8500 $7000

Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...