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Bridgeport Bottling Corporation is considering the purchase of a new bottling machine. The machine would cost $ 2 2 0 , 0 0 0 and
Bridgeport Bottling Corporation is considering the purchase of a new bottling machine. The machine would cost $ and has an
estimated useful life of eight years with zero salvage value. Management estimates that the new bottling machine will provide net
annual cash flows of $ Management also believes that the new 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
Click here to view the factor table.
Calculate the net present value. If the net present value is negative, use either a negative sign preceding the number eg or parentheses
eg For calculation purposes, use decimal places as displayed in the factor table provided, eg Round present value answer to
decimal places, eg
Net present value
How much would the reduction in downtime have to be worth in order for the project to be acceptable?
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