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Compute npv and advise management accordingly

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Jeremy limited wishes to expand its output by purchasing a new machine worth 170,000 and installation costs are estimated at 40,000/=. In the 4th year, this machine will call for an overhaul to cost 80,000/=. Its expected inflows are:

                                                Shs.

                        Year 1               60,000

                        Year 2               72,650

                        Year 3               35,720

                        Year 4               48,510

                        Year 5               91,630

                        Year 6               83,715

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

Reference no: EM131816466

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