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Birkenstock is considering an investment in a nylon-knitting machine. The machine requires an initial investment of $26,500, has a five-year life, and has no
Birkenstock is considering an investment in a nylon-knitting machine. The machine requires an initial investment of $26,500, has a five-year life, and has no residual value after five years. The company's cost of capital is 10.61%. The company has estimated expected cash inflows for three scenarios: pessimistic, most likely, and optimistic. These expected cash inflows are listed in the following table. Calculate the range for the NPV across the three scenarios. (Click on the icon here in order to copy the contents of the data table below into a spreadsheet.) Expected cash inflows Year Pessimistic Most likely 1 $6,850 $9,310 Optimistic $11,790 2345 7,260 10,230 13,310 8,720 11,760 15,810 7,720 10,670 12,680 5,650 7,790 8,680 For the pessimistic scenario, the NPV is $640.64. (Round to the nearest cent.) For the most likely scenario, the NPV is $ 10801.98. (Round to the nearest cent.) For the optimistic scenario, the NPV is $ 20434.68. (Round to the nearest cent.) The NPV range is $ (Round to the nearest cent.)
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