UURISOLTOORHpital Hudgeting Tutorial Question 4.2 (Net Present Value) 3.000 1. Buchun Enterprises is considering investing in a new machine. The machine will be purchased on 1 January in Year I at a cost of 50,000. It is castimated that it would last for 5 years, and it will then be sold at the end of the year for C2,000 in cash. The respectivene cash flows estimated to be received by the company as a result of purchasing the machine during each year of its life are as follows Year E 1 16.000 10,000 45.000 35.000 The company's cost of capital is 12% Required: Calculate: (a) the payback period for the project net prenent value Solution to check taj Payback period: 265 years (NPV = 547.962 3. The following net cash flows relate to Lecher Limited in connection with a certain project that has an initial cost of 2,500,000 Net Cash Flow Year 1 SX000 2 850.000 3 830,000 4 1.200.000 5 700,000 The company's required rate of return is 15% Required: Calculate the net present value of the project