Question
Yalken Corporation is considering the purchase of a new machine. The cost of the machine is $250,000. The cash flows for five years are given
Yalken Corporation is considering the purchase of a new machine. The cost of the machine is $250,000. The cash flows for five years are given below.
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
| Cash flows | $84,790 | $102,500 | $70,580 | $64,760 | $115,700 |
The company is in the 35 percent tax bracket. Assuming that the cost of capital is 12%, calculate the net present value.
-
$204,394
-
$314,452
-
$(64,452)
-
$64,463
best solution
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Financial Markets and Institutions
Authors: Jeff Madura
11th Edition
1133947875, 9781305143005, 1305143000, 978-1133947875
