Option 2: Finance the Purchase of the CNC Machine Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Inflows Gross Revenue $ Salvage value $600,000 $600,000 $600,000 $600,000 $ 600,000 Total Inflows 600,000 600,000 600,000 600,000 40,000 640,000 Outflows Initial purchase/Cash Outlay (50,000] Cost of Goods Sold Operating Costs Lease payments $1 payment (390,000) (390,000) (390,000) [120,000) (120,000) (120,000) [26,400) (390,000) (390,000) "Outflows are (120,000) (120,000) entered as a negative (26,400) (26,400) (26,400) (26,400) number Total Outflows (50,000) (536,400) (536,400) (536,400) (536,400) (536,401) Overall Cashflow $ (50,000) $ 63,600 $ 63,600 $ 63,600 $ 63,600 $ 103,599 Net Present Value: Payback Period Discount rate $ 239,291