You are the director of a factory and you want to encourage the CEO to purchase a new

machine for an additional production line. To help build your case you have come up with

the following numbers:

New machine will cost $750,000.

New Machine has a life of 8 years.

New machine will generate cash flows of $50,000 in year 1.

New machine will generate cash flows of $70,000 in year 2.

New machine will generate cash flows of $80,000 in year 3.

New machine will generate cash flows of $100,000 in year 4-8.

Company discount rate is 10%.

You think you should conduct an NPV analysis of these numbers before you speak with

the CEO. Will you recommend the CEO purchase the new machine?