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The management of ABC Corporation is considering the purchase of a new machine costing $430,000. The company's desired rate of return is 10%. The present
The management of ABC Corporation is considering the purchase of a new machine costing $430,000. The company's desired rate of return is 10%. The present value factors for $1 at compound interest of 10% for 1 through 5 years are 0.909, 0.826, 0.751, 0.683, and 0.621, respectively. In addition to the foregoing information, use the following data in determining the acceptability in this situation by using the NPV methodology calculations
Year | Income from Operations | Net Cash Flow |
1 | $100,000 | $180,000 |
2 | 40,000 | 120,000 |
3 | 20,000 | 100,000 |
4 | 10,000 | 90,000 |
5 | 10,000 | 90,000 |
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