Question
SunnySide Inc. is debating an upgrade of its agricultural machinery. The current machine can be sold for $45,000. The new machine costs $190,000, with an
SunnySide Inc. is debating an upgrade of its agricultural machinery. The current machine can be sold for $45,000. The new machine costs $190,000, with an additional $50,000 required for operational adjustments. Expected additional cash inflows from the new machine are:
- Year 1: $60,000
- Year 2: $150,000
- Year 3: $150,000
The machine has a three-year lifespan, and the required rate of return is 8%. Calculate the NPV and advise if SunnySide Inc. should make the investment.
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Horngrens Accounting
Authors: Tracie L. Miller Nobles, Brenda L. Mattison, Ella Mae Matsumura
11th edition
978-0133851151, 013385115X, 978-0133866889
