Sheridan Bottling Corporation is considering the purchase of a new bottling machine. The machine would cost $170,000
Fantastic news! We've Found the answer you've been seeking!
Question:
Sheridan Bottling Corporation is considering the purchase of a new bottling machine. The machine would cost $170,000 and has an estimated useful life of eight years with zero salvage value. Management estimates that the new bottling machine will provide net annual cash flows of $30,000. Management also believes that the new machine will save the company money because it is expected to be more reliable than other machines, and thus will reduce downtime. Assume a discount rate of 9%.
Calculate the net present value.
How much would the reduction in downtime have to be worth in order for the project to be acceptable?
Related Book For
Managerial Accounting Tools for business decision making
ISBN: 978-1118096895
6th Edition
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso
Posted Date: