Nantucket Company is proposing to spend $140,000 to purchase a machine that will provide annual cash flows

Question:

Nantucket Company is proposing to spend $140,000 to purchase a machine that will provide annual cash flows of $25,000. The appropriate present value factor for 10 periods is 5.65.

Instructions

Compute the proposed investment's net present value, and indicate whether the investment should be made by Nantucket Company.

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...