Exercise $14-2($Algo$)$ Net Present Value Analysis $[$L$014-2]$

The management of Kunkel Company is considering the purchase of a $$28,000$ machine that would reduce operating

costs by $$7,000$ per year. At the end of the machine's five$-$year useful life, it will have zero salvage value. The

company's required rate of return is $13\%.$

Click here to view Exhibit $14$B$-1$ and Exhibit $14$B$-2,$ to determine the appropriate discount factor$($s$)$ using table.

Required:

Determine the net present value of the investment in the machine.

What is the difference between the total, undiscounted cash inflows and cash outflows over the entire life of the

machine?