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Ierofanga [76]
2 years ago
8

Net present value caine bottling corporation is considering the purchase of a new bottling machine. the machine would cost $275,

000 and has an estimated useful life of 11 years with zero salvage value. management estimates that the new bottling machine will provide net annual cash flows of $45,800 and annual net income of $30,000. assume a discount rate of 12%. a. calculate the net present value of the bottling machine
Business
1 answer:
Tju [1.3M]2 years ago
8 0

From the calculation below, the net present value of the bottling machine is -$3,053.38.

<h3>Calculation of net present value</h3>

The net present value of the bottling machine can be calculated as follows:

Present value of annual net annual cash flows = Annual net cash flows * ((1 - (1 / (1 + Discount rate))^number of years) / Discount rate)

Present value of annual net annual cash flows = $45,800 * ((1 - (1 / (1 + 12%))^11) / 12%)

Present value of annual net annual cash flows = $45,800 * 5.9376991325097

Present value of annual net annual cash flows = $271,946.62

Therefore, we have:

Net present value of the bottling machine = Present value of annual net annual cash flows – Machine cost = $271,946.62 - $275,000 = -$3,053.38

Learn more about net present value here: brainly.com/question/13031140.

#SPJ1

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6 0
2 years ago
The demand for apples in the U.S. is Qus = 800 - 20P, and Foreign Demand for apples is Qf = 1200 - 40P, where quantity demanded
MA_775_DIABLO [31]

Answer:

Option (2) is correct.

$20; 800

400;400

Explanation:

Given that,

Demand for apples in the U.S. : Qus = 800 - 20P

Foreign Demand for apples: Qf = 1200 - 40P

World Demand for apples, Qwd

= Demand for apples in the U.S. + Foreign Demand for apples

= Qus + Qf

= 800 - 20P + 1200 - 40P

= 2,000 - 60P

Equilibrium price for apples is at a point where the world supply is equal to the world demand for apples:

Qwd = Qws

2,000 - 60P = 200 + 30P

1,800 = 90P

P = 20 ⇒ world equilibrium price for apples

Therefore,

world supply of apples is Qs = 200 + 30P

                                                = 200 + 30(20)

                                                = 200 + 600

                                                = 800

At equilibrium Pw = $20

Demand for apples in the U.S. : Qus = 800 - 20P

                                                            = 800 - 20(20)

                                                            = 800 - 400

                                                            = 400

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