A small industrial machine costs $136000 and is expected to earn annual net cash inflows of $58200,
Question:
A small industrial machine costs $136000 and is expected to earn annual net cash inflows of $58200, $52600, $49500 and $42100, before it wears out sufficiently to be unreliable and must be sold for an estimated $16300.
Required
(a) If funds earn 11 per cent, what is its NPV?
(b) If funds earn 15 per cent, what is its NPV?
(c) Advise management on the purchase of the machine.
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a NPV CF 1 1 r CF 2 1 r 2 CF 3 1 r 3 CF n 1 r n INV 58200 111 52600 1...View the full answer
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ISBN: 9780730369325
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