Compute the net present value of the machine

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Mayberry Textiles Inc. is considering the purchase of a new machine which has an initial cost of $400,000. Annual operating cash inflows are expected to be $100,000 each year for eight years. No salvage value is expected at the end of the asset's life. Mayberry's cost of capital is 14 percent.

Required: Compute the net present value of the machine. (Ignore income taxes)

A local merchant is considering the purchase of a new machine which has an initial cost of $35,000. Annual operating cash inflows are expected to be $10,000 each year for five years. No salvage value is expected at the end of the machine's life. The company's cost of capital is 14 percent.

Required: Compute the net present value of the machine. (Ignore income taxes)

Hi-Town Nursery is considering the purchase of a new greenhouse. The greenhouse will have an initial cost of $20,000 and an estimated salvage value of $3,000 at the end of its useful life. The nursery expects annual net operating cash inflows to increase $5,000 each year for ten years. The cost of capital is 12 percent.

Required: Compute the net present value of the new greenhouse. (Ignore income taxes)

Reference no: EM13787827

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