Question
Mylon, Inc., is considering the purchase of a machine that would cost $100,000 and would last for 9 years. At the end of 9 years,
Mylon, Inc., is considering the purchase of a machine that would cost $100,000 and would last for 9 years. At the end of 9 years, the machine would have a salvage value of $23,000. The machine would reduce labor and other costs by $19,000 per year. Additional working capital of $2,000 would be needed immediately. All of this working capital would be recovered at the end of the life of the machine. The company requires a minimum pretax return of 13% on all investment projects. Assuming a 13% return, what is the net present value of the proposed project? Round final answer to the nearest dollar. You must use the Annuity table when appropriate to get the correct answer.
Should Mylon Inc. investment be accepted? Why or why not?
If the answer was zero, should they accept the investment?
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