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The yard manager wants to purchase a new machine for $600,000 (total cost including delivery, installation and tax). Estimates it will save $110,000 a year
| The yard manager wants to purchase a new machine for $600,000 (total cost including delivery, installation and tax). Estimates it will save $110,000 a year for 7 years, with a residual value of $25,000 after 7 years. | ||||||
| Required (a): Using NPV analysis, with the company's required rate of return of 7%, should the purchase be approved? (ignore depreciation tax impact) | ||||||
| Show NPV calculation in table format by year or using annuity for years 1 - 7. | ||||||
| 7% | ||||||
| Year | Amount | Factor | NPV | |||
| 0 | 600,000 | |||||
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Financial And Managerial Accounting For Decision Makers
Authors: Michelle Hanlon, Robert Magee, Glenn Pfeiffer, Thomas Dyckman
4th Edition
1618533614, 9781618533616
