Calculate the net present value

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Question - Blast Bottling Corporation is considering the purchase of a new bottling machine. The machine would cost $ 313,000 and has an estimated useful life of 10 years with zero salvage value. Management estimates that the new bottling machine will provide net annual cash flows of $50,150. Assume a discount rate of 10% Present value factor of cash inflows for 10 years is 6.145.

Required -

a) Calculate the net present value

b) Should the company accept this project?

c) How much would the reduction in downtime have to be worth in order for the project to be acceptable? In other words, at what cost point, will this be worth meaning the annual cash flows will be offset by the cost?

Reference no: EM133168251

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