Question
Birkenstock is considering an investment in a nylon-knitting machine. The machine requires an initial investment of $26,500, has a 5-year life, and has no residual
Birkenstock is considering an investment in a nylon-knitting machine. The machine requires an initial investment of $26,500, has a 5-year life, and has no residual value at the end of the 5 years. The company's cost of capital is 10.46%. Known with less certainty are the actual after-tax cash inflows for each of the 5 years. 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 given each scenario.(Click on the icon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet.)
Expected cash inflows Year Pessimistic Most likely Optimistic 1 6,650 9,260 11,840 2 7,350 10,260 13,330 3 8,760 11,850 15,840 4 7,770 10,730 12,810 5 5,820 7,780 8,680
For the pessimistic scenario, the NPV is $__.
(Round to the nearest cent.)
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