Hello,

I worked on this problem but I am not sure if Belotti Company should purchase the Machine?

PROBLEM #4 - CAPITAL INVESTMENT ANALYSIS (2 pts.) Belotti Company is reviewing a proposal to purchase a machine to produce a new product. Data related to the proposal are as follows. Annual revenue Annual cash expenses Cost of machine Cost of machine installation/ testing Project life Discount rate Salvage value Required: $41,400 30,500 32,000 3,000 5 years 15% $0 1.Compute the project's net present value. 2. Should Belotti Company purchase the machine? 1. Compute the project's net present value. Initial Cash Investment: Chart Values are based on: $35,000 i=15% Year 1 2 3 4 5 Outflow $10,900 $10,900 $10,900 $10,900 $10,900 X X X X X Table Factor 0.8696 0.7561 0.6575 0.5718 0.4972 Present value of cash inflows : Present value of cash outflows : Net Present Value : = = = = = Present Value $9,478.64 $8,241.49 $7,166.75 $6,232.62 $5,419.48 $36,538.98 $36,538.98 $35,000.00 $1,538.98 2. Should Belotti Company purchase the machine? 1