Question
Clairmont Corporation is considering the purchase of a machine that would cost $190,000 and would last for 10 years. At the end of 10 years,
Clairmont Corporation is considering the purchase of a machine that would cost $190,000 and would last for 10 years. At the end of 10 years, the machine would have a salvage value of $16,000. By reducing labor and other operating costs, the machine would provide annual cost savings of $32,000. The company requires a minimum pretax return of 13% on all investment projects. (Ignore income taxes in this problem.) |
|
Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor(s) using table. |
|
The net present value of the proposed project is closest to: (Round discount factor(s) to 3 decimal places, intermediate and final answers to the nearest dollar amount.) |
$(26,995)
$20,568
$130,000
$(11,648)
Clairmont Corporation is considering the purchase of a machine that would cost $190,000 and would last for 10 years. At the end of 10 years, the machine would have a salvage value of $16,000. By reducing labor and other operating costs, the machine would provide annual cost savings of $32,000. The company requires a minimum pretax return of 13% on a investment projects. (Ignore income taxes in this problem.) Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor(s) using table The net present value of the proposed project is closest to: (Round discount factor(s) to 3 decimal places, intermediate and final answers to the nearest dollar amount.) O $(26,995) O $20,568 O $130,000 O $(11,648)
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