Question
Description Amount Existing machine salvage value $20,000 New machine cost $220,000 Working capital required $45,000 Year 1 additional cash inflow $55,000 Year 2 additional cash
Description | Amount |
Existing machine salvage value | $20,000 |
New machine cost | $220,000 |
Working capital required | $45,000 |
Year 1 additional cash inflow | $55,000 |
Year 2 additional cash inflow | $75,000 |
Year 3 additional cash inflow | $95,000 |
Year 4 additional cash inflow | $65,000 |
New machine lifespan | 4 years |
Required rate of return | 9% |
- Calculate the NPV of the investment.
- Should the new machine be purchased?
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Horngrens Accounting
Authors: Tracie L. Miller Nobles, Brenda L. Mattison, Ella Mae Matsumura
11th edition
978-0133851151, 013385115X, 978-0133866889
