Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Metlock, Inc. is considering the purchase of a new machine for $530000 that has an estimated useful life of 5 years and no salvage value.

image text in transcribed

Metlock, Inc. is considering the purchase of a new machine for $530000 that has an estimated useful life of 5 years and no salvage value. The machine will generate net annual cash flows of $92750. It is believed that the new machine will reduce downtime because of its reliability. Assume the discount rate is 8%. In order to make the project acceptable, the increase in cash flows per year resulting from reduced downtime must be at least Year Present Value of 1 at 8% .926 .857 PV of an Annuity of 1 at 8% .926 1.783 2.577 3.312 3.993 .794 .735 .681 $16205 per year. O $39982 per year. O $39724 per year. $20197 per year

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

Step: 3

blur-text-image

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

ISE Business Accounting Volume 1

Authors: Frank Wood, Alan Sangster

8th Edition

0273638394, 9780273638391

More Books

Students also viewed these Accounting questions

Question

LO6Outline steps for creating a performance improvement plan.

Answered: 1 week ago