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Axis is planning to buy a new machine that operates to closer tolerances than the existing machine and it is somewhat more efficient. This machine,
Axis is planning to buy a new machine that operates to closer tolerances than the existing machine and it is somewhat more efficient. This machine, which costs $100,000, would yield an cash savings of $10,000 per year for 10 years because of improved efficiency. An appropriate discount rate is 10 percent. Time value of money factors are: 10% for 10 years PV: 0.386 PV of an annuity: 6.145 FV: 2.594 FV of an annuity: 15.937 What value would Axis have to attribute to the closer tolerances to justify the purchase? (select the nearest response). If I did my present value computations correctly, the cash savings does not justify the purchase
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