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Homework answers / question archive / Your company is deciding whether to invest in a new machine
Your company is deciding whether to invest in a new machine. The new machine will increase cash flow by $275,000 per year. You believe the technology used in the machine has a 10-year life; in other words, no matter when you purchase the machine, it will be obsolete 10 years from today. The machine is currently priced at $1.8 million. The cost of the machine will decline by $140,000 per year until it reaches $1.1 million, where it will remain.
If your required return is 8 percent, calculate the NPV today. (Do not round intermediate
calculations and round your answer to 2 decimal places, e.g., 32.16.)
NPV
r I
If your required return is 8 percent, calculate the NPV for the following years. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. A negative answer should be indicated by a minus sign.)
NPV c Year 1 Year 2 Year 3 ? Year 4 Year 5 Year 6
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