Compute NPV and Advice management accordingly

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Question - Jeremy limited wishes to expand its output by purchasing a new machine worth ksh. 170000 and installation cost are estimated at ksh 40000. In the 4th year, this machine will call for an overhaul to cost ksh.80000. It's expected inflows are:

Year 1 ksh.60000

Year 2 Ksh.72650

Year3 Ksh.35720

Year4 Ksh.48510

Year5 Ksh.91630

Year6 Ksh.83715

This company can raise finance to purchase machine at 12% interest rate. Compute NPV and Advice management accordingly?

Reference no: EM133047495

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