Current Attempt in Progress

Novak Bottling Corporation is considering the purchase of a new bottling machine. The machine would cost $$200,000$ 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 $$36,000.$ 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 $10\%.$

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 e$.$g$.-45$ or parentheses

e$.$g$.(45).$ For calculation purposes, use $5$ decimal places as displayed in the factor table provided, e$.$g$.1\mathrm{.}25124.$ Round present value answer to $0$

decimal places, e$.$g$.1,250.)$

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 reductionon in downtime