Management is considering purchasing a new machine. The estimated useful life of the machine
is 15 years with a purchase price of $400,000 and a residual value of $40,000. Cash flows from the
machine purchase are expected to be $70,000 per year. Management has specified a minimum rate
of return of 14%.
Using the net present value method and the following determine whether the company should purchase
the machine.
Present Value Factors
1-15 years stream of payments			6.142
15 year single sum			0.14