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E10-2 Herky Foods is evaluating a new wrapping machine. With the machine, Herky will save money on packaging in each of the next five
E10-2 Herky Foods is evaluating a new wrapping machine. With the machine, Herky will save money on packaging in each of the next five years, producing the series of cash inflows shown below. The initial investment (CFO) is $1.25 million. Using a 6% discount rate, determine the net present value (NPV) of the machine given its expected cash inflows shown in the following table. Based on the project's NPV, should Herky make this investment? Year Cash inflow (CFt) 1 $400,000 2 375,000 3 300,000 350,000 LO 5 200,000
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