Question
The following answers which one is correct? Or give your answer please Watson Manufacturing has an opportunity to invest $96,000 in a new machine. The
The following answers which one is correct? Or give your answer please
Watson Manufacturing has an opportunity to invest $96,000 in a new machine. The new machine will result in cost savings of $25,000 in year 1, $25,000 in year 2, $25,000 in year 3, $25,000 in year 4, and $25,000 in year 5. The new machine will require a tune-up in year 3 costing $3,000. The salvage value of the machine will be $10,000 at the end of year 5. Watson's cost of capital is 10%. Create a table showing the cash flows in each year of the project and compute the NPV.
0 | 1 | 2 | 3 | 4 | 5 |
96,000 | 25,000/(1.10)1 | 25,000/ (1.10)2 | 25,000/(1.10)3 | 25,000/(1.10)4 | 35,000/ (1.10)5 |
22,727.3 | 20,661.2 | 18,782.9 | 17,075.3 | 21,732.2 | |
Total PV |
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