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Southern Manufacturing Limited is considering the investment of $230,000 in a new machine. The machine will generate cash flow of $40,000 per year for each
Southern Manufacturing Limited is considering the investment of $230,000 in a new machine. The machine will generate cash flow of $40,000 per year for each year of its eight-year life and will have a salvage value of $26,000 at the end of its life. The companys cost of capital is 10%. Table 6-4 and Table 6-5.
Note: Use appropriate factor(s) from the tables provided. Round the PV factors to 4 decimals.
Required:
Calculate the net present value of the proposed investment. (Ignore income taxes.)
Table 6-4: Factors for Calculating the Present Value of $1 Table 6-5: Factors for Calculating the Present Value of an Annuity of $1Step by Step Solution
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