Hi I need help and an explanation on how to Calculate the net present value (NPV) of the new machine
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M.T. Glass, Inc. is considering the acquisition of a new piece of heavy machinery to
replace an old, outdated machine currently used in its business operations. The new
machine would cost $180,000 and is expected to last 9 years. The new machine would
require a repair of $25,000 in year seven and another repair costing $8,000 in year
eight. In addition, purchasing this new machine would require an immediate investment
of $30,000 in working capital which would be released for investment elsewhere at the
end of the 9 years. The machine is expected to have a $10,000 salvage value at the end
of 9 years. The old, outdated machine costs $160,000 per year to maintain and run. The
new machine is only expected to cost $90,000 per year to maintain and run. M.T. Glass
has a cost of capital of 16% and an income tax rate of 40%.
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Calculate the net present value (NPV) of the new machine. If your answer is negative,
place a minus sign in front of your answer with no spaces in between (e.g., -1234).
Do not use decimals in your answer.
You will need to use the present value table factors to answer this
question. I have attached that table to the files
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Answers
Status NEW
Posted 21 Apr 2017 01:04 AM
My Price 10.00
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file 1492738366-Solutions file.docx preview (56 words )
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