Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Blast Bottling Corporation is considering the purchase of a new bottling machine. The machine would cost $313,000 and has an estimated useful life of
Blast Bottling Corporation is considering the purchase of a new bottling machine. The machine would cost $313,000 and has an estimated useful life of 10 years with zero salvage value. Management estimates that the new bottling machine will provide net annual cash flows of $50,150. Management also believes that the new bottling machine will save the company money because it is expected to be more reliable than other machines, and thus will reduce downtime. Assume a discount rate of 10%. Present value factor of cash inflows for 10 years is 6.145. Round net present value to 0 decimal place such as 20. For any negative net present value, use either a negative sign preceding the number as -30 or parentheses as (30). Do NOT enter a dollar sign. For example, if you are typing $10,000 as your answer, answer should be typed as 10,000 without any dollar sign. (a) Calculate the net present value. Net Present Value $ (b) Should the company accept the project? Yes or No (Write yes or no) (c) How much would the reduction in downtime have to be
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started