Question
GoodLife center is considering buying the following Tanning Machine: The machine costs $30,000. Over the next 8 years (the life of the machine), the machine
GoodLife center is considering buying the following Tanning Machine:
The machine costs $30,000.
Over the next 8 years (the life of the machine), the machine will generate annual sales of $14,400 ($40 per person and 360 customers).
The annual cost of running the tanning machine, including the manpower is $4,000 per year, and other costs (overhead) are 1,500 per year.
Depreciation on the machine is straight-line, with a salvage value of zero at the end of 8
GoodLifes tax rate is 40%.
If GoodLifes discount rate 15%, what is the NPV of this Tanning Machine?
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