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Brief Exercise 13.4 Michener Bottling Corporation is considering the purchase of a new bottling machine. The machine would cost $220,000 and has an estimated useful
Brief Exercise 13.4 Michener Bottling Corporation is considering the purchase of a new bottling machine. The machine would cost $220,000 and has an estimated useful life of eight years with zero salvage value. Management estimates that the new botting machine will provide net annual cash flows of $38,000. 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 9%. Click here to view PV table. as displayed in the factor table provided, e.g. 1.25124. Round present value answer to 0 decimal places, e.g. 1,250.) Calculate the net present value. (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 place Net present value $ How much would the reduction in downtime have to be worth in order for the project to be acceptable? Present value of reduction in downtime SAVE FOR LATER SUBMIT ANS Question Attempts: 0 of 3 used
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