Skysong , Inc. is considering the purchase of a new machine for $ 490000 that has an
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Skysong, Inc. is considering the purchase of a new machine for $490000 that has an estimated useful life of 5 years and no salvage value. The machine will generate net annual cash flows of $85750. It is believed that the new machine will reduce downtime because of its reliability. Assume the discount rate is 8%. In order to make the project acceptable, the increase in cash flows per year resulting from reduced downtime must be at least
Year | Present Value of 1 at 8% | PV of an Annuity of 1 at 8% |
1 | .926 | .926 |
2 | .857 | 1.783 |
3 | .794 | 2.577 |
4 | .735 | 3.312 |
5 | .681 | 3.993 |
Related Book For
Engineering Economy
ISBN: 978-0132554909
15th edition
Authors: William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
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