Solution-Calculate the NPV for the project

Calculate the NPV for the project

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Reference no: EM133066757

Question - Foster Company wants to buy a numerically controlled (NC) machine to be used in producing specially machined parts for manufacturers of trenching machines (to replace an existing manual system). The outlay required is $3,575,000. The NC equipment will last 5 years with no expected salvage value. The expected incremental after-tax cash flows (cash flows of the NC equipment minus cash flows of the old equipment) associated with the project follow:

Year	Cash Inflow	Cash Expenses Related to the Project
1	$1,750,000	$685,000
2	$1,750,000	$685,000
3	$1,750,000	$685,000
4	$1,750,000	$685,000
5	$1,750,000	$685,000

Foster has a cost of capital equal to 15%. The above cash flows are expressed without any consideration of inflation. Calculate the NPV for the project. Round to two decimal places.

Reference no: EM133066757

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Calculate the NPV for the project

Reference no: EM133066757

Reference no: EM133066757

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