The management of Kunkel Company is considering the purchase of a $26,000 machine that would reduce operating costs by $6,500 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 16%.

1. Determine the net present value of the investment in the machine

For the just completed year, Hanna Company had net income of $47,000. Balances in the companys current asset and current liability accounts at the beginning and end of the year were as follows:

	December 31
	End of Year		Beginning of Year
Current assets:
Cash	$	63,000	$	82,000
Accounts receivable	$	164,000	$	198,000
Inventory	$	436,000	$	367,000
Prepaid expenses	$	11,000	$	13,500
Current liabilities:
Accounts payable	$	356,000	$	392,000
Accrued liabilities	$	9,000	$	12,500
Income taxes payable	$	35,000	$	25,000
The Accumulated Depreciation account had total credits of $54,000 during the year. Hanna Company did not record any gains or losses during the year. 1. Use the indirect method to determine the net cash provided by (or used in) operating activities for the year.