=+18-24 KK DCF, accrual accounting rate of return, working capital, evaluation of performance, no income taxes OBJECTIVES 3, 6, 7 Currimundi Laboratories plans to purchase a new centrifuge machine for its Brisbane facility. The machine costs $857500 and is expected to have a useful life of five years, with a terminal disposal value of $57500. Savings in cash operating costs are expected to be $250000 per year. However, additional working capital is needed to keep the machine running efficiently. The working capital must continually be replaced, so an investment of $70000 needs to be maintained at all times, but this investment is fully recoverable

(will be ‘cashed in’) at the end of the useful life. Currimundi Laboratories’s required rate of return is 12%. Ignore income taxes in your analysis. Assume all cash flows occur at year-end except for initial investment amounts.

Required 1 Calculate net present value.