Question: Exercise 13- 2 Net Present Value Method: The management of Kunkel Company is considering the purchase of a $27,000 machine that would reduce operating costs

Exercise 13- 2 Net Present Value Method:

The management of Kunkel Company is considering the purchase of a $27,000 machine that would reduce operating costs by $7,00 per year, at the end of the machine's five year useful life, it will have zero scrap value. The company's required of rate return is 12%.

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.

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