Interior Products, Inc. is evaluating the purchase of a new machine to use in its manufacturing process. The new machine would
cost $ 37 comma 000 and have a useful life of 5 years. At the end of the machine's life, it would have a residual value of $ 2 comma 100. Annual cost savings from the new machine would be $ 12 comma 000 per year for each of the 5 years of its life. Interior Products, Inc. has a minimum required rate of return of 18% on all new projects. The net present value of the new machine would be closest toA $39,943. B.$52.943 C.$4,181 D.$1,238
1 answer:
Answer:
According to Given Data
$1,444
According to attached question
C.$4,181
Explanation:
Options are inconsistent with the data provided.
Net present value is the Net value all cash inflows and outflows in present value term. All the cash flows are discounted using a required rate of return.
Ne t present value of the machine is $1,444
Options are inconsistent with the data provided.
Workings are made in an MS Excel file, which is attached with this answer.
Original Question is attached with this answer, please find it.
According to correct data
Ne t present value of the machine is $4,181
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