Use in calculating NPV for a cash inflow project:

The management of Fine Electronics Company is considering to purchase an equipment to be attached with the main manufacturing machine. The equipment will cost $$6,000$ and will increase annual cash inflow by $$2,200.$ The useful life of the equipment is $6$ years. After $6$ years it will have no salvage value. The management wants a $20\%$ return on all investments.

Required:

$1.$ Compute net present value $($NPV$)$ of this investment project.

$2.$ Should the equipment be purchased according to NPV analysis?

$2.$ Using NPV for decisions surrounding a cost reduction project:

Smart Manufacturing Company is planning to reduce its labor costs by automating a critical task that is currently performed manually. The automation requires the installation of a new machine. The cost to purchase and install a new machine is $$15,000.$ The installation of machine can reduce annual labor cost by $$4,200.$ The life of the machine is $15$ years. The salvage value of the machine after fifteen years will be zero. The required rate of return of Smart Manufacturing Company is $25\%.$

Required:

$1.$ Should Smart Manufacturing Company purchase the machine?

$3.$ A project requires an initial investment of $$225,000$ and is expected to generate the following net cash inflows:

Year $1$: $$95,000$

Year $2$: $$80,000$

Year $3$: $$60,000$

Year $4$: $$55,000$

Required:

$1.$Compute net present value of the project if the minimum desired rate of return is $12\%.$

This is worth $60$ points and you need to complete and turn in here by February $28$th$,2024$ at midnight.