Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Marinis Corporation is considering buying a brand new machine and has gathered the following data: Investment $105,600 Estimated life 5 years Estimated annual cash inflows

image text in transcribedimage text in transcribed

Marinis Corporation is considering buying a brand new machine and has gathered the following data: Investment $105,600 Estimated life 5 years Estimated annual cash inflows $29,400 Estimated annual cash outflows $10,000 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, e.g. 1.25124. Round present value answer to O decimal places, e.g. 125.) $ Net Present Value Should the company buy the machine based on your results? 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, e.g. 1.25124. Round present value answer to 0 decimal places, e.g. 125.) $ Net Present Value Should the company buy the machine based on your results? Further investigation reveals that there would be a sales increase of $7,200 annually as a result of an increase in quality from the customer's perspective and a cost reduction of $3,100 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, e.g. 1.25124. Round present value answer to 0 decimal places, e.g. 125.) $ Net Present Value Should the company buy the machine

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

International Corporate Reporting Global And Diverse

Authors: Pauline Weetman, Ioannis Tsalavoutas, Paul Gordon

5th Edition

1138364991, 9781138364998

More Books

Students also viewed these Accounting questions

Question

Are people born to be leaders?

Answered: 1 week ago