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74. Rambus Inc. would like to purchase a production machine for $325.000, The machine is expected to have a life of three years, and a
74. Rambus Inc. would like to purchase a production machine for $325.000, The machine is expected to have a life of three years, and a salvage value of $50,000. Annual maintenance costs will total $12.500. Annual savings are predicted to be $112.50X). The company's required rate of return is 12 percent. (12 Points) Factors: Present Value of $1 ir=12%) Year 0 1.0XXX) Year! 0.8929 Year 2 0.7972 Year 3 0.7118 Required: (1) Using the Present Value Factors for SI, calculate the net present value of this investment Cignoring taxes). (2) Based on your answer in requirement I should Rambus purchase the production machine? Today Year 1 Year 2 Year 3 Timeline (n) Purchase Price Maintenance Costs Annual Savings Salvage Value Total Cash In/Out) PV Factor PV Cash Flow Total PV Net Cash Flow 73. Rambus Inc. would like to purchase a production machine for $325,000. The machine is expected to have a life of three years, and a salvage value of $50,000. Annual maintenance costs will total $12,500. Annual savings are predicted to be $112,500. The company's required rate of return is 12 percent. (12 Points) Required: Ignoring the time value of money, calculate the net cash inflow or outflow resulting from this investment opportunity. Today Yeart Year 2 Year Timeline (n) Purchase Price Maintenance Costs Annual Savings Salvage Value Total Cash In/Out) Total Net Cash Flow
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