Question

Mechanico Inc. wants to buy a machine that costs $45,000. It expects that the machine will yield $30,000, 520,000, and $15,000 for 3 years with a
discount rate of 10 percent. What would be the Net Present Value (NPV) of the machine?
The NPV of the machine is $?

Answer 1

Answer:

$423,303.72

Step-by-step explanation:

-The present value factor, v, is given as:

$v=\frac{1}{1+i}$

where i is the discount rate.

-The net present value can then be calculated as:

$NPV=-C_o+C_fv^t\\\\\\=-45000+30000(0.9091)+520000(0.9091)^2+15000(0.9091)^3\\\\=423303.72$

Hence, the machine has a net present value of $423,303.72

Answer 2

Answer:

$10,071.37

Step-by-step explanation: