Question
Mexico Company is considering the purchase of a machine that would cost $600,000 and would last for 6 years, at the end of which, the
Mexico Company is considering the purchase of a machine that would cost $600,000 and would last for 6 years, at the end of which, the machine would have a salvage value of $50,000. The machine would reduce labor and other costs by $110,000 per year. Additional working capital of $4,000 would be needed immediately, all of which would be recovered at the end of 6 years. The company requires a minimum pretax return of 10% on all investment projects. (Ignore income taxes.) |
Click here to view Exhibit 11B-1 and Exhibit 11B-2, to determine the appropriate discount factor(s) using tables. |
Required: |
Determine the net present value of the project. (Negative amount should be indicated by a minus sign. Round discount factor(s) to 3 decimal places, intermediate and final answers to the nearest dollar amount.) net present value= _________??? |
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