Answer:
Yes we should go with this project because it has a positive NPV of $4,350
Explanation:
We need to calculate the net present value of the machine to decide whether to invest in the machine or not.
As per Given Data
Costs $270,000
Cash Inflows
Year 2 $100,000
Year 3 $150,000
Year 4 $75,000
Interest Rate = 6%
Net Present Value
As we know Net Present value is calculated by discounting each years cash flows using using the Weighted Average cost of Capital.
Year Cash Inflows Discount factor 13% Present values
Year 0 $(270,000) (1+6%)^-0 $(270,000)
Year 2 $100,000 (1+6%)^-2 $89,000
Year 3 $150,000 (1+6%)^-3 $125,943
Year 4 $75,000 (1+6%)^-4 <u>$59,407 </u>
Net present value <u>$4,350 </u>
<span>The triple bottom line(tbl) was introduced back in the 20th century, and the TBL era refers to the early 21st century. The TBL is used to measure a company's degree of social responsibility, economic value, and environmental impact, which are the three things considered most important to a company.</span>
six billion three hundred ninety two million ninety four thousand three
A firm's <u>operating breakeven</u><u> point</u> is the level of sales necessary to cover all operating costs.
More about operating breakeven point:
The point at which sales revenue equals all fixed and variable costs while producing no profit for the company is known as the operating breakeven point. A fixed cost is a cost that a company incurs regardless of how many units are produced.
Fixed costs include things like rent, insurance, and interest payments. On the other hand, a variable cost is a cost that varies according on the amount of output. Variable expenses include, for example, labor and raw materials.
Learn more about operating breakeven point here:
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Complete Question:
A firm's ________ is the level of sales necessary to cover all operating costs, i.e., the point at which EBIT equals zero.
A) cash breakeven point
B) financial breakeven point
C) operating breakeven point
D) total breakeven point
