The management of Kunkel Company is considering the purchase of a $27,000 machine that would reduce operating costs by $7,000 per year. At the end of the machines five-year useful life, it will have zero scrap value. The companys required rate of return is 12%.

Required: 1. Determine the net present value of the investment in the machine. (Any cash outflows should be indicated by a minus sign. Use Microsoft Excel to calculate present values. Do not round intermediate calculations.)

item	future cash received per year	present value of cash inflows
annual cash inflows/reduced cost

npv calculation
present value of cash inflow
less cost of machine
net present value