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Homework answers / question archive / Griffith Corporation is considering an investment in a labor-saving machine
Griffith Corporation is considering an investment in a labor-saving machine. Information on this machine follows:
|
Cost |
$30,000 |
|
Salvage value in five years |
$0 |
|
Estimated life |
5 years |
|
Annual depreciation |
$6,000 |
|
Annual reduction in existing costs |
$8,000 |
Refer to Griffith Corporation. Assume for this question only that Griffith Corporation uses a discount rate of 16 percent to evaluate projects of this type. What is the project's net present value? Present value tables or a financial calculator are required.
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