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Downtown Bakeries is considering a new dough mixer: Existing mixer's salvage value: $12,000. New mixer's cost: $180,000. Additional working capital: $20,000. Annual additional cash inflows:
Downtown Bakeries is considering a new dough mixer:
- Existing mixer's salvage value: $12,000.
- New mixer's cost: $180,000.
- Additional working capital: $20,000.
- Annual additional cash inflows: $45,000 for 7 years.
- Required rate of return: 15%.
Requirements:
- Calculate the NPV.
- Evaluate if the bakery should proceed with the purchase.
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Horngrens Accounting
Authors: Tracie L. Miller Nobles, Brenda L. Mattison, Ella Mae Matsumura
11th edition
978-0133851151, 013385115X, 978-0133866889
