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Sheffield, Inc. is considering the purchase of a new machine for $610000 that has an estimated useful life of 5 years and no salvage
Sheffield, Inc. is considering the purchase of a new machine for $610000 that has an estimated useful life of 5 years and no salvage value. The machine will generate net annual cash flows of $106750. It is believed that the new machine will reduce downtime because of its reliability. Assume the discount rate is 8%. In order to make the project acceptable, the reduction in downtime must be worth Present Value of 1 at 8% PV of an Annuity of 1 at 8% Year 1 0.926 0.926 2 0.857 1.783 3 0.794 2.577 4 0.735 3.312 50 0.681 3.993 $23246 per year. $45720 per year. $36749 per year. o $18651 per year.
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