Your company is considering the purchase of a new machine for production The following numbers show...

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Your company is considering the purchase of a new machine for production The following numbers show the various cost required Annual reduction in scrap Cost of new machine Cost of new software Labor cost savings per year Life of machine in years Monthly maintenance costs 7,500.00 218,500.00 18,900.00 115,000.00 6.00 2,800.00 45,000.00 21,000.00 Required overhaul year 3 Salvage value new machine in 6 years Salvage value of current equip Required rate of return REQUIRED 12,000.00 14% 1 Prepare a schedule showing complete details in computing the present value of the cash flows. 2 Compute the NPV of this purchase 3 Compute the internal rate of Return 2 Would you recommend purchasing the new machine? Explain why or who not. Present Value Analysis Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 1. Present value of cash flows 2. NPV of the purchase 3. Internal rate of return 4. Would you purchase the new machine? Explain your decision. Your company is considering the purchase of a new machine for production The following numbers show the various cost required Annual reduction in scrap Cost of new machine Cost of new software Labor cost savings per year Life of machine in years Monthly maintenance costs 7,500.00 218,500.00 18,900.00 115,000.00 6.00 2,800.00 45,000.00 21,000.00 Required overhaul year 3 Salvage value new machine in 6 years Salvage value of current equip Required rate of return REQUIRED 12,000.00 14% 1 Prepare a schedule showing complete details in computing the present value of the cash flows. 2 Compute the NPV of this purchase 3 Compute the internal rate of Return 2 Would you recommend purchasing the new machine? Explain why or who not. Present Value Analysis Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 1. Present value of cash flows 2. NPV of the purchase 3. Internal rate of return 4. Would you purchase the new machine? Explain your decision.

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To analyze whether the company should purchase the new machine well calculate the present value of c... View the full answer