Question
*URGENT HELP NEEDED UPVOTE GUARANTEED* Marinis Corporation is considering buying a brand new machine and has gathered the following data: Investment $105,600 Estimated life 5
*URGENT HELP NEEDED UPVOTE GUARANTEED*
Marinis Corporation is considering buying a brand new machine and has gathered the following data:
Investment | $105,600 | ||
Estimated life | 5 years | ||
Estimated annual cash inflows | $29,400 | ||
Estimated annual cash outflows | $10,000 |
Salvage value for the machine is estimated to be zero. Click here to view PV table.
Calculate the net present value of the machine assuming a 5% discount rate. (If the net present value is negative, use either a negative sign preceding the number eg -45 or parentheses eg (45). For calculation purposes, use 5 decimal places as displayed in the factor table provided, e.g. 1.25124. Round present value answer to 0 decimal places, e.g. 125.)
Net Present Value | $ |
Should the company buy the machine based on your results?
Further investigation reveals that there would be a sales increase of $7,200 annually as a result of an increase in quality from the customers perspective and a cost reduction of $3,100 annually as a result of lower warranty claims. Considering these additional facts, calculate the Net Present Value of the machine. (If the net present value is negative, use either a negative sign preceding the number eg -45 or parentheses eg (45). For calculation purposes, use 5 decimal places as displayed in the factor table provided, e.g. 1.25124. Round present value answer to 0 decimal places, e.g. 125.)
Net Present Value | $ |
Should the company buy the machine?
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