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Phoenix Electronics is evaluating the purchase of a new circuit board manufacturing machine. The current machine is operable for another year and can be sold

Phoenix Electronics is evaluating the purchase of a new circuit board manufacturing machine. The current machine is operable for another year and can be sold for $15,000. The new machine costs $300,000 and requires an additional $70,000 in working capital. It will generate $100,000 in cash inflows during the first year and increase by $20,000 annually over the next three years. The new machine has a four-year life and zero disposal value.

  • Calculate the NPV assuming a 10% discount rate.
  • Assess the financial desirability of the new machine purchase.

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