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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
Car Repair, Inc., would like to purchase a new machine for $400,000. The machine will have a life of 4 years with no salvage value, and is expected to generate annual cash revenue of $180,000. Annual cash expenses, excluding depreciation, will total $20,000. The company uses the straight-line depreciation method, has a tax rate of 30 percent, and requires a 10 percent rate of return.
1. Find the NPV of this investment using the format presented in .
2. Should the company purchase the machine? Explain.
Â
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