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Calculate the net present value

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Question - Salem Ltd. is considering the purchase of a new machine. This new machine has a purchase price of $1,200,000. In addition, the company will have to commit working capital of $30,000 for the life of the asset. Management estimates that the machine will result in a net after-tax cash inflow of $347,500 per year. The machine will have an estimated useful life of five years and a residual (salvage) value of $50,000. Salem Ltd. has a minimum required return for similar investments of 14%. Calculate the net present value (NPV) for this investment opportunity?

Reference no: EM132969570

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