A company is considering an investment (at time/year = 0) in a machine that produces large plastic boxes. The cost of the machine is 41,455 dollars with zero expected salvage value. Annual production (in units) during the 3-year life of the machine is expected to be (starting at time = 1) 4,609, 8,388, and 10,073. The sale price per unit of the plastic boxes is 15 dollars in year one, and the price is then expected to increase by 9% per year. Production costs per unit will be 4 dollars in year one, and then production costs will increase by 3% per year. Depreciation on the machine is 11,755 dollars per year, the tax rate is 40% and the minimum acceptable rate of return is 6% percent per year, compounded annually. 

Calculate the net present value of this investment. Assume all flows are at the end of each year. (note: round your answer to two decimal places; do not include spaces or dollar signs.)

Answer rating: 100% (QA)

To calculate the net present value NPV of the investment youll need to discount all the cash flows t... View the full answer