Question
A company is considering investing in a new machine, The cost of the machine is $50,000, it has a 10-year life, and no residual value.
A company is considering investing in a new machine, The cost of the machine is $50,000, it has a 10-year life, and no residual value. The machine will save $7,000 of costs every year. The discount rate is 8%. The NPV of the project is ? . Single choice.
Negative $3,030
Positive $20,000
Positive $8,350
Negative $6,910
Part 2: A company is considering investing in a new machine, The cost of the machine is $50,000, it has a 10 year life, and HAS a residual value of $10,000 at the end of its life. The machine will save $7,000 of costs every year. The discount rate is 8%. The NPV of the project is
Positive $6,970
Positive $30,000
Positive $1,600
Negative $400
Any explanation and help would be greatly appreciated!
Periods 4% 5% 6% 7% 8% 9% 10% 1 2 3 4 5 0.962 0.952 0.943 0.935 0.926 0.917 0.909 1.886 1.859 1.833 1.808 1.783 1.759 1.736 2.775 2.723 2.673 2.624 2.577 2.531 2.487 3.630 3.546 3.465 3.387 3.312 3.240 3.170 4.452 4.329 4.212 4.100 3.993 3.890 3.791 6 7 8 9 10 5.242 5.076 4.917 4.767 4.623 4.486 4.355 6.002 5.786 5.582 5.389 5.206 5.033 4.868 6.733 6.463 6.210 5.971 5.747 5.535 5.335 7.435 7.108 6.802 6.515 6.247 5.995 5.759 8. 111 7.722 7.360 7.024 6.710 6.418 6.145 11 12 13 14 15 8.760 8.306 7.887 7.499 7.139 6.805 6.495 9.385 8.863 8.384 7.943 7.536 7.161 6.814 9.986 9.394 8.853 8.358 7.904 7.487 7.103 10.563 9.899 9.295 8.745 8.244 7.786 7.367 11.118 10.380 9.712 9.108 8.559 8.061 7.606 16 17 18 19 20 11.652 10.838 10.106 9.447 8.851 8.313 7.824 12.166 11.274 10.477 9.763 9.122 8.544 8.022 12.659 11.690 10.828 10.059 9.372 8.756 8.201 13.134 12.085 11.158 10.336 9.604 8.950 8.365 13.590 12.462 11.470 10.594 9.818 9.129 8.514Step by Step Solution
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