Exercise 13-1 Net Present Value Method [LO1]
Exercise 13-1 Net Present Value Method [LO1]
The management of Opry Company, a wholesale distributor of suntan products, is considering the purchase of a $32,000 machine that would reduce operating costs in its warehouse by $6,500 per year. At the end of the machine’s 7-year useful life, it will have no scrap value. The company’s required rate of return is 12%. (Ignore income taxes.)
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 Click here to view Exhibit 13B-2, to determine the appropriate discount factor(s) using table.
    Required:1.Determine the net present value of the investment in the machine. (Negative amount should be indicated by a minus sign. Round discount factor(s) to 3 decimal places, intermediate and final answers to the nearest dollar amount. Omit the "$" sign in your response.)
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  Net present value$     Â
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 2.What is the difference between the total, undiscounted cash inflows and cash outflows over the entire life of the machine? (Omit the "$" sign in your response.)
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  Net cash flow$  Â
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Posted 21 Apr 2017 03:04 AM
My Price 108.00
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