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1 Pool Corp is considering purchasing an existing machine with a new machine costing $400,000. The new machine's life is 4 years, its salvage value
1 Pool Corp is considering purchasing an existing machine with a new machine costing $400,000. The new machine's life is 4 years, its salvage value is $40,000 and it will provide annual cash savings of $125,000. The existing machine could be sold immediately for $20,000. If the company's discount rate is 12%, the net present value of the project is closest to (factors from Exhibit 12B-1 and Exhibit 12B-2 for an interest rate of 12% are provided below). Period Present value of $1 Present value of an annuity 0.893 0.893 2 0.797 1.690 3 0.712 2.402 0.636 3.037 5 0.567 3.605 a. $25,190 4 b. $17,910 C. $32,470 d. ($14,810)
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