Your company is considering the purchase of a $20,000 machine, assuming a five-year useful life and an expected cash inflow from the machine of $5,000 annually. You want a 12% return on your investment. The present value of $1 after 5 periods at 12% is 0.56743 and the present value of an annuity of $1 for 5 periods at 12% is 3.60478. What is the net present value of the machine? Note: If the net present value is negative, type a minus sign “-” in front of your answer. For example: if the NPV is negative $1,000, type “-1,000” (no spaces). Round your answer to the nearest whole dollar; i.e., do NOT include any decimal places. Do NOT include the $ sign.
Your company is considering the purchase of a $20,000 machine, assuming a five-year useful life and an expected cash inflow from the machine of $5,000 annually. You want a 12% return on your investment. The present value of $1 after 5 periods at 12% is 0.56743 and the present value of an annuity of $1 for 5 periods at 12% is 3.60478. What is the net present value of the machine? Note: If the net present value is negative, type a minus sign “-” in front of your answer. For example: if the NPV is negative $1,000, type “-1,000” (no spaces). Round your answer to the nearest whole dollar; i.e., do NOT include any decimal places. Do NOT include the $ sign.
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 1PA: Your company is planning to purchase a new log splitter for is lawn and garden business. The new...
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Question
Your company is considering the purchase of a $20,000 machine, assuming a five-year useful life and an expected
Note: If the net present value is negative, type a minus sign “-” in front of your answer. For example: if the NPV is negative $1,000, type “-1,000” (no spaces). Round your answer to the nearest whole dollar; i.e., do NOT include any decimal places. Do NOT include the $ sign.
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