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Tanzania [10]
3 years ago
11

Janes, Inc., is considering the purchase of a machine that would cost $410,000 and would last for 5 years, at the end of which,

the machine would have a salvage value of $41,000. The machine would reduce labor and other costs by $101,000 per year. Additional working capital of $3,000 would be needed immediately, all of which would be recovered at the end of 5 years. The company requires a minimum pretax return of 13% on all investment projects.
Required:
Determine the net present value of the project. (Negative amount should be indicated by a minus sign.)
Business
1 answer:
ki77a [65]3 years ago
5 0

Answer:

- $33,678.21

Explanation:

Cash flow Summary of the Project will be as follows

Year 0 = $410,000 + $3,000 = - $413,000

Year 1 = $101,000

Year 2 = $101,000

Year 3 = $101,000

Year 4 = $101,000

Year 5 = $101,000 + $41,000 + 3,000 =  $145,000

So the Net Present Value can now be calculated using the CFj function of a Financial calculator as follows :

- $413,000 CF 0

  $101,000 CF 1

  $101,000 CF 2

  $101,000 CF 3

  $101,000 CF 4

 $145,000 CF 5

i/yr = 13%

Shift NPV = - $33,678.21

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Answer: The correct answers are a) & b). That is MARTHA, MARTHA; JANE.

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2 years ago
Nancy's union has negotiated a three-year wage contract that provides for a 2.4% increase indexed to inflation. The rates of inf
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Answer:

C) COLA plus 2.4%

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3 0
3 years ago
What book is use for the purchase of goods in credit?
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7 0
2 years ago
g Knowledge Check 03 Vineyard Corporation, a manufacturer of fine wines, began the year with 20,000 bottles in inventory. The co
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Answer:

195,000 bottles

Explanation:

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