1.

(Ignore income taxes in this problem.) Sibble Corporation is considering the purchase of a machine that would cost $460,000 and would last for 6 years. At the end of 6 years, the machine would have a salvage value of $63,000. By reducing labor and other operating costs, the machine would provide annual cost savings of $90,000. The company requires a minimum pretax return of 11% on all investment projects. The net present value of the proposed project is closest to: (Round your NPV to nearest dollar.) rev: 12_14_2012

-$48,150

-$45,570

-$79,210

-$16,210

2.

(Ignore income taxes in this problem.) Farah Corporation has provided the following data concerning a proposed investment project:

Initial investment		$	600,000
Life of the project			8 years
Working capital required		$	22,000
Annual net cash inflows		$	120,000
Salvage value		$	76,000

The company uses a discount rate of 11%. The working capital would be released at the end of the project.

Required:

Compute the net present value of the project. (Round your final answer to the nearest whole dollar.)

What is Net present value?

$