Michaels, Inc. purchased a machine for $75,000. The machine has a useful life of five years and
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Michaels, Inc. purchased a machine for $75,000. The machine has a useful life of five years and no salvage value. Straight-line depreciation is to be used. The machine is expected to generate cash flow from operations, net of income taxes, of $25,000 in each of the five years. Michaels' expected rate of return is 10%. Information on present value factors is as follows:
Period | Present Value of $1 at 10% | Present value of ordinary annuity of $1 at 10% |
1 | 0.90909 | 0.90909 |
2 | 0.82645 | 1.73554 |
3 | 0.75132 | 2.48685 |
4 | 0.68301 | 3.16986 |
5 | 0.62092 | 3.79079 |
What would be the net present value?
Related Book For
Engineering Economy
ISBN: 978-0132554909
15th edition
Authors: William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
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