# Qen and Associates wants to buy automated coffee roaster/grinder/ brewer. This piece of equipment would have a

## Question:

Qen and Associates wants to buy automated coffee roaster/grinder/ brewer. This piece of equipment would have a useful life of six years, would cost $218,500, and would increase annual net inflows by $57,000. Assume that there is no residual value at the end of six years. The company’s minimum rate of return is 14 percent.

Using the net present value method, prepare an analysis to determine whether the company should purchase the machine. Use Tables 1 and 2 in the appendix on present value tables.

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...

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