XYZ Company is considering the purchase of a new machine. The machine

will cost $200,000 and is expected to last 10 years. However, the

machine will need maintenance costing $25,000 at the end of year three

and at the end of year seven. In addition, purchasing this machine would

require an immediate investment of $30,000 in working capital which

would be released for investment elsewhere at the end of the 10 years.

The machine is expected to have a $12,000 salvage value at the end of

10 years. The machine will be used to generate net cash inflows of

$50,000 per year in each of the 10 years. XYZ Company has a cost of

capital of 9% and an income tax rate of 40%. For tax purposes, the

machine would be classified in the MACRS 5-year class life and will

be depreciated using the optional straight-line method.

Calculate the net present value (NPV) of this machine. If your answer

is negative, place a minus sign in front of your answer with no spaces

in between (e.g., -1234).

Present Value of a Lump-Sum 3% 5% 9% Periods 1 0.9709 2 0.9426 3 0.9151 4 0.8885 0.8626 6 0.8375 7 0.8131 8 0.7894 9 0.7664 10 0.7441 12 0.7014 15 0,6419 16 0.6232 17 0.6050 18 0.5874 19 0.5703 20 0.5537 21 0.5375 24 0.4920 25 0.4776 0.9524 0.9070 0.8638 0.8227 0.7835 0.7460 0.7107 0.6768 0.6446 0.6139 0.5568 0.4810 0.4581 0.4363 0.4155 0.3957 0.3769 0.3589 0.3101 0.2953 Rate of interest per period in percent 10% 12% 14% 0.9259 0.9174 0.9091 0.8929 0.8772 0.8573 0.8417 0.8265 0.7972 0.7695 0.7938 0.7722 0.7513 0.7118 0.6750 0.7350 0.7084 0.6830 0.6355 0.5921 0.6806 0.6499 0.6209 0.5674 0.5194 0.6312 0.5962 0.5645 0.5066 0.4556 0.5835 0.5470 0.5132 0.4523 0.3996 0.5403 0.5019 0.4665 0.4039 0.3506 0.5003 0.4604 0.4241 0.3606 0.3075 0.4630 0.4225 0.3855 0.3220 0.2697 0.3971 0.3555 03186 0.2567 0.2076 0.3152 0.2745 0.2394 0.1827 0.1401 0.2919 0.2519 0.2176 0.1631 0.1229 0.2703 0.2311 0.1978 0.1456 0.1078 0.2503 0.2120 0.1799 0.1300 0.0946 0.2317 0.1945 0.1635 0.1161 0.0829 0.2146 0.1784 0.1486 0.1037 0.0728 0.1987 0.1637 0.1351 0.0926 0.0638 0.1577 0.1264 0.1015 0.0659 0.0431 0.1460 0.1160 0.0923 0.0588 0.0378 15% 16% 20% 0.8696 0.8621 0.8333 0.7561 0.7432 0.6944 0.6575 0.6407 0.5787 0.5718 0.5523 0.4823 0.4972 0.4761 0.4019 0.4323 0.4104 0.3349 0.3759 0.3538 0.2791 0.3269 0.3050 0.2326 0.2843 0.2630 0.1938 0.2472 0.2267 0.1615 0.1869 0.1685 0.1122 0.1229 0.1079 0,0649 0.1069 0.0930 0.0541 0.0929 0.0802 0.0471 0.0808 0.0691 0.0376 0.0703 0.0596 0.0313 0.0611 0.0514 0.0261 0.0531 0.0443 0.0217 0.0349 0.0284 0.0126 0.0304 0.0245 0.0105 Periods 3% 5% 8% 0.9709 0.9524 0.9259 2 1.9135 1.8594 1.7833 3 2.8286 2.7233 2.5771 4 3.7171 3.5460 3.3121 4.5797 4.3295 3.9927 5.4172 5.0757 4.6229 7 6.2303 5.7864 5,2064 8 7.0197 6.4632 5.7466 9 7.7861 7.1078 6.2469 10 8.5302 7.7217 6.7100 12 9.9540 8.8633 7.5361 15 11.9379 10.3797 8.5595 16 12.5611 10.8378 8.8514 17 13.1661 11.2741 9.1216 18 13.7535 11.6896 9.3719 19 14.1228 12.0653 9.6036 20 14.8775 12.4622 98182 21 15.4150 12.8212 10.0168 25 17.4132 14.099 10.6748 Present Value of an Annuity Rate of interest per period in percent 9% 10% 12% 14% 0.9174 0.9091 0.8929 0.8772 1.7591 1.7355 1.6901 1.6467 2.5313 2,4869 2.4018 2.3216 3.2397 3.1699 3.0374 2.9137 3.8897 3.7908 3.6048 3.4331 4.4859 4.3553 4.1114 3.8887 5.0330 4,8684 4.5638 4.2883 5.5348 5.3349 4.9676 4.6389 5.9953 5.7590 5.3283 4.9464 6.4177 6.1446 5.6502 5.2161 7,1607 6,8137 6.1944 5.6603 8.0607 7.6061 6.8109 6.1422 8.3126 7.8237 6.9740 6.2651 8.5436 8.0215 7.1196 6.3729 8.7556 8.2014 7.2497 6.4674 8.9501 8.3649 7.3658 6.5504 9.1286 8.5135 7.4694 66231 9.2922 8.6487 7.5620 6,6870 9,8226 9.0770 7.8431 6,8729 15% 0.8696 1.6257 2.2832 2.8550 3.3522 3.7845 4.1604 4.4873 4.7716 5.0188 5.4206 5.8474 5.9542 6.0472 6.1280 6.1982 6.2593 63125 6.41 16% 20% 0.8621 0.8333 1.6052 1.5278 2.2459 2.1065 2.7982 2.3887 3.2743 2.9906 3.6847 3.3255 4.0386 3.6046 43436 3.8372 4.6065 4.0310 4.8332 5.1971 4.4392 5.5755 4.6755 5,6685 4.7296 5.7487 4.7746 5.8178 4.8122 3.8775 4.8415 5.9288 48696 5.9731 4.8913) 6.0971 4.9476 4.1925