Johanna is considering purchasing a greenhouse for use in her business that will cost $25,000. She...

 

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Johanna is considering purchasing a greenhouse for use in her business that will cost $25,000. She anticipates selling this machine at the end of five years for $7,500. The machine is projected to produce the following cash flows: • End of year 1: $500 • End of year 2: $750 • End of year 3: $1,000 • End of year 4: $2,100 • End of year 5: $4,300 Calculate the net present value (NPV) of purchasing the machine if Johanna's opportunity cost is 10% Note: the sign (+/-) makes a difference in NPV calculations. Based on your calculations, include the appropriate sign in your answer. Johanna is considering purchasing a greenhouse for use in her business that will cost $25,000. She anticipates selling this machine at the end of five years for $7,500. The machine is projected to produce the following cash flows: • End of year 1: $500 • End of year 2: $750 • End of year 3: $1,000 • End of year 4: $2,100 • End of year 5: $4,300 Calculate the net present value (NPV) of purchasing the machine if Johanna's opportunity cost is 10% Note: the sign (+/-) makes a difference in NPV calculations. Based on your calculations, include the appropriate sign in your answer.

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