Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Michener Bottling Corporation is considering the purchase of a new bottling machine. The machine would cost $200,000 and has an annual cash flows of $36,500.
Michener Bottling Corporation is considering the purchase of a new bottling machine. The machine would cost $200,000 and has an annual cash flows of $36,500. Management also believes that the new machine will save the company money because it is expected to be more reliable than other machines, and thus will reduce downtime. Assume a discount rate of 10%. Click here to view PV table. Calculate the net present value. (If the net present value is negative, use either a negative sign preceding the number e.g. 45 or parentheses e.g. (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. 1,250.) Net present value $ How much would the reduction in downtime have to be worth in order for the project to be acceptable? Present value of reduction in downtime
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started