Question
Your company uses the NPV to evaluate capital budgeting decisions. It is considering purchasing a 3D printer at a cost of $15,000. It estimates it
Your company uses the NPV to evaluate capital budgeting decisions. It is considering purchasing a 3D printer at a cost of $15,000. It estimates it can generate cash inflow of $15,000 in the year following purchase. In the second year it will have a cash outflow of $4,000, as the printer will require extensive maintenance and a software update. In the printer's third year of operation, it will generate cash flow of a $10,000. After that, the machine will then be scrapped. The machine will then be scrapped.
Should the company purchase the printer if its required rate of return is 8%?
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