Net Present Value Analysis. Architect Services, Inc., would like to purchase a blueprint machine for $$50,000.$ The machine is expected to have a life of $4$

years, and a salvage value of $$10,000.$ Annual maintenance costs will total $$14,000.$ Annual savings are predicted to be $$30,000.$ The company's required rate of

return is $11$ percent.

Required:

Ignoring the time value of money, calculate the net cash inflow or outflow resulting from this investment opportunity.

Find the net present value of this investment using the format presented in Figure $5\mathrm{.}2"$NPV Calculation for Copy Machine Investment by Jackson's Quality

Copies". Should the company purchase the blueprint machine? Explain.

Internal Rate of Return Analysis. Architect Services, Inc., would like to purchase a blueprint machine for $$50,000.$ The machine is expected to have a life of

$4$ years, and a salvage value of $$10,000.$ Annual maintenance costs will total $$14,000.$ Annual savings are predicted to be $$30,000.$ The company's required rate of

return is $11$ percent $($this is the same data as the previous exercise$).$

Required:

Use trial and error to approximate the internal rate of return for this investment proposal. Round to the nearest dollar.

Should the company purchase the blueprint machine? Explain.

Net Present Value Analysis with Multiple Investments, Alternative Format. Conway Construction Corporation would like to purchase a fleet of trucks

at a cost of $$260,000.$ Additional equipment needed to maintain the fleet of trucks will be purchased at the end of year $2$ for $$40,000.$ The trucks are expected to

have a life of $8$ years, and a salvage value of $$20,000.$ Annual costs for maintenance, insurance, and other cash expenses will total $$42,000.$ Annual net cash

receipts resulting from this purchase are predicted to be $$135,000.$ The company's required rate of return is $14$ percent.

Required:

Find the net present value of this investment using the format presented in Figure $5\mathrm{.}4$ "Alternative NPV Calculation for Jackson's Quality Copies".

Should the company purchase the new fleet of trucks? Explain.

Calculating NPV and IRR Using Excel. Wood Products Company would like to purchase a computerized wood lathe for $$100,000.$ The machine is expected

to have a life of $5$ years, and a salvage value of $$5,000.$ Annual maintenance costs will total $$20,000.$ Annual net cash receipts resulting from this machine are

predicted to be $$45,000.$ The company's required rate of return is $15$ percent.

Required:

Use Excel to calculate the net present value and internal rate of return in a format similar to the Computer Application spreadsheet shown in the

chapter.

Should the company purchase the wood lathe? Explain.