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Baird Brothers Construction is considering the purchase of a machine at a cost of $$135,000.$ The machine is expected to generate cash flows of $$26,000$ per year for $10$ years and can be sold at the end of $10$ years for $$16,000.$ Interest is at $12\%.$ Assume the machine purchase would be paid for on the first day of year one, but that all other cash flows occur at the end of the year. Ignore income tax considerations.

Required:

a$.$ What is the net present value of the cash flows?

b$.$ Determine whether Baird should purchase the machine.

Note: Use tables, Excel, or a financial calculator. $($FV of $$1,$ PV of $$1,$ FVA of $$1,$ PVA of $$1,$ FVAD of $$1$ and PVAD of $$1)$

Complete this question by entering your answers in the tabs below.

Required $A$

Required B

What is the net present value of the tash flows?

Note: Round your intermediate and final answer to nearest whole dollar.

Net present value

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Baird Brothers Construction is considering the purchase of a machine at a cost of $$135,000.$ The mache is expected to generate cash flows of $$26,000$ per year for $10$ years and can be sold at the end of $10$ years for $$16,000.$ Interest is at $12\%.$ Assume the machine purchase would be paid for on the first day of year one, but that all other cash flows occur at the end of the year. Ignore income tax considerations.

Required:

a$.$ What is the net present value of the cash flows?

b$.$ Determine whether Baird should purchase the machine.

Note: Use tables, Excel, or a financial calculator. $($FV of $$1,$ PV of $$1,$ FVA of $$1,$ PVA of $$1,$ FVAD of $$1$ and PVAD of $$1)$

Complete this question by entering your answers in the tabs below.

Required $A$

Required B

Determine whether Baird should purchase the machine.

Determine whether Baird should purchase the machine.