Question: Carrie Rushing is considering the purchase of a new production

Carrie Rushing is considering the purchase of a new production machine that costs $120,000. She has been told to expect decreased annual operating expenses of $40,000 for four years. At the end of the fourth year the machine will have no salvage value and will be scrapped.

Required
What is the net present value of the machine if Carrie’s cost of capital is 9 percent (ignore income taxes)?


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  • CreatedMarch 11, 2015
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