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Calculate the net present value for machine a

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ABC Inc is considering the purchase of a new machine for the production of computers. Machine A costs $3,400,000 and will last for 6 years. Variable costs are 30% of sales and fixed costs are $850,000 per year. Machine B costs $5,600,000 and will last for 20 years. Variable costs for the machine are 30% of sales and fixed costs are $1,000,000 per year. The sales for each machine will be $5,000,000 per year. The required rate of return is 8%, the tax rate is 30%, and both machines will be depreciated using straight-line with a no salvage value.

Calculate the net present value for Machine A. (Round to 2 decimals)

Calculate the equivalent annual annuity for Machine B. (Round to 2 decimals)

Reference no: EM132420306

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