An ice cream machine has an initial cost of $22,000. In year 4, it will require major

Question:

An ice cream machine has an initial cost of $22,000. In year 4, it will require major maintenance at a cost of $4000. Each year, it is projected to generate $5,000 in net revenues for the company. The annual operating cost for the machine is $800, and it has a salvage value of $1500 in year 8. What is the net present value for this machine, using a 7 percent annual discount rate?

Net Present Value
What is NPV? The net present value is an important tool for capital budgeting decision to assess that an investment in a project is worthwhile or not? The net present value of a project is calculated before taking up the investment decision at... 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...