Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Blue Spruce Corporation is considering buying a brand new machine and has gathered the following data: Salvage value for the machine is estimated to be
Blue Spruce Corporation is considering buying a brand new machine and has gathered the following data: Salvage value for the machine is estimated to be zero. Click here to view the factor table. Calculate the net present value of the machine assuming a 6% discount rate. (If the net present value is negative, use either a negative sign preceding the number eg - 45 or parentheses eg (45). For calculation purposes, use 5 decimal places as displayed in the factor table provided, e.g. 1.25124. Round present value answer to 0 decimal places, e.g. 125.) Net Present Value $ Should the company buy the machine based on your results? Further investigation reveals that there would be a sales increase of $7,000 annually as a result of an increase in quality from the customer's perspective and a cost reduction of $3,100 annually as a result of lower warranty claims. Considering these additiona facts, calculate the Net Present Value of the machine. (If the net present value is negative, use either a negative sign preceding the number eg -45 or parentheses eg (45). For calculation purposes, use 5 decimal places as displayed in the factor table provided, e.g. 1.25124. Round present value answer to 0 decimal places, e.g. 125.) Net Present Value Should the company buy the machine
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