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 Recieved per year | Present Value Cash Inflows

Annual Cah Inflows/Reduced Costs $7,000

Net Present Value Calculation
Present Value of Cash Inflows
Less Cost of Machine	$(27,000.00)
Net present value	$(1,765.00)