You have the opportunity to invest in a new technology that will cost $2,000,000 (now, at time

Question:

You have the opportunity to invest in a new technology that will cost $2,000,000 (now, at time zero). The machine will generate cash flows of $1,000,000 at the end of years 1-5 and require maintenance costs of $100,000 at the beginning of years 1-5. The relevant is 12%.
Required:
a.) draw a time line depicting the project's cash flows;
b.) calculate the value of the project's cash benefits net of its costs (the project's , or NPV);
c.) based on the project's NPV, should you invest in the new technology? Net Present Value
What is NPV? The net present value is an important tool for capital budgeting decision to assess that an investment in a project is worthwhile or not? The net present value of a project is calculated before taking up the investment decision at... Discount Rate
Depending upon the context, the discount rate has two different definitions and usages. First, the discount rate refers to the interest rate charged to the commercial banks and other financial institutions for the loans they take from the Federal...