Your company is deciding whether to invest in a new machine. The new machine will increase cash flow by $485,000 per year. You believe the technology used in the machine has a 10-year life; in other words, no matter when you purchase the machine, it will be obsolete 10 years from today. The machine is currently priced at $2.95 million. The cost of the machine will decline by $315,000 per year until it reaches $1.375 million, where it will remain.

If your required return is 8 percent, calculate the NPV today. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

If your required return is 8 percent, calculate the NPV if you wait to purchase the machine until the indicated year. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

	NPV
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6

Should you purchase the machine?

multiple choice 1

Yes

No

If so, when should you purchase it?

multiple choice 2

Today

Two years from now

Three years from now