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Please help. Thanks! Sambus Inc. would like to purchase a production machine for $405,000. The machine is expected to have a life of three years,
Please help. Thanks!
Sambus Inc. would like to purchase a production machine for $405,000. The machine is expected to have a life of three years, and a salvage value of $20,000. Annual maintenance costs will total $4,500. Annual savings due to the use of this machine are predicted to be $161,000. The company's required rate of return is 8 percent. Required: A. Calculate the net present value of this investment (ignoring taxes). ...... B. Based on your answer in requirement 1, should Sambus purchase the production machine? Your answers to this open-ended assignment should be placed in the space below this line. ..L... A Today Year 1 Year 2 Year 3 ..... Purchase of machine Annual savings Maintenance costs Salvage value Total cashflow .... Present value factor Present values .... Net Present Value Double click and put your answer here. BStep by Step Solution
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