Calculate net present value of benefits

Reference no: EM1368471

Company A is considering the purchase of a new machine that would lower cash outflow. The cost of the machine is 30,000. The annual reduction in cash flows is:

Year Amount
1 5000
2 8000
3 12000
4 14000

If the cost of capital is 10%, calculate the following:

-the net present value of benefits (pvb)
-the net present value of costs (pvc)
-the net present value (npv)
-based on these analysis, should company A buy the machine?

Reference no: EM1368471

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