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Marinis Corporation is considering buying a brand new machine and has gathered the following data: Investment $105,500 Estimated life 6 years Estimated annual cash inflows
Marinis Corporation is considering buying a brand new machine and has gathered the following data: Investment $105,500 Estimated life 6 years Estimated annual cash inflows $29,900 Estimated annual cash outflows $10,400 Salvage value for the machine is estimated to be zero. Click here to view PV table. Calculate the net present value of the machine assuming a 5% discount rate. (If the net present value is negative, use either a negative sign preceding the number eg -45 or parentheses eg (45). For calculation purposes, use 5 decimal places as displayed in the factor table provided, eg. 1.25124. Round present value answer to O decimal places, eg. 125.) $ -47000 Net Present Value Should the company buy the machine based on your results? No Further investigation reveals that there would be a sales increase of $7,100 annually as a result of an increase in quality from the customer's perspective and a cost reduction of $2,800 annually as a result of lower warranty claims. Considering these additional facts, calculate the Net Present Value of the machine. (If the net present value is negative, use either a negative sign preceding the number eg-45 or parentheses eg (45). For calculation purposes, use 5 decimal places as displayed in the factor table provided, eg. 1.25124. Round present value answer to 0 decimal places, eg. 125.) $ Net Present Value Should the company buy the machine? Yes
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