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Herky Foods is considering acquisition of new wrapping machine. By purchasing the machine, Herky will save money on packaging in each of the next 5
Herky Foods is considering acquisition of new wrapping machine. By purchasing the machine, Herky will save money on packaging in each of the next 5 years, producing the series of cash inflows shown below. The initial investment is estimated at $1.25 million. Using 6% discount rate, determine the net present value of the machine given its expected operating cash inflows shown in the following table. Based on the projects NPV, should Herky make this investment? Year 1-$400,000, Year 2-$375,000, Year 3-$300,000, Year 4-$350,000, Year 5 $200,000
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