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Michaels, Inc. purchased a machine for $75,000. The machine has a useful life of five years and no salvage value. Straight-line depreciation is to be

Michaels, Inc. purchased a machine for $75,000. The machine has a useful life of five years and no salvage value. Straight-line depreciation is to be used. The machine is expected to generate cash flow from operations, net of income taxes, of $25,000 in each of the five years. Michaels' expected rate of return is 10%. Information on present value factors is as follows:

Period

Present Value of $1 at 10%

Present value of ordinary annuity of $1 at 10%

1

0.90909

0.90909

2

0.82645

1.73554

3

0.75132

2.48685

4

0.68301

3.16986

5

0.62092

3.79079

What would be the net present value?

image text in transcribed Michaels, Inc. purchased a machine for $75,000. The machine has a useful life of five years and no salvage value. Straight-line depreciation is to be used. The machine is expected to generate cash flow from operations, net of income taxes, of $25,000 in each of the five years. Michaels' expected rate of return is 10%. Information on present value factors is as follows: Period Present Value of $1 at 10% Present value of ordinary annuity of $1 at 10% 1 0.90909 0.90909 2 0.82645 1.73554 3 0.75132 2.48685 4 0.68301 3.16986 5 0.62092 3.79079 What would be the net present value

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