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Your company is deciding whether to invest in a new machine. The new machine will increase cash flow by $320,000 per year. You believe the

Your company is deciding whether to invest in a new machine. The new machine will increase cash flow by $320,000 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 $1,700,000. The cost of the machine will decline by $106,000 per year until it reaches $1,170,000, where it will remain. If your required return is 13 percent, calculate the NPV if you purchase the machine today. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) NPV $ If your required return is 13 percent, calculate the NPV if you wait to purchase the machine until the indicated year. (A negative answer should be indicated by a minus sign. 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?

  • Yes

  • No

If so, when should you purchase it?

  • Today

  • One year from now

  • Two years from now

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