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Nico’s Novelties is considering purchasing pinball machines to place in amusement parks. The machines would incur a total cost of 400,000 dollars, have a 11 year useful life, and would have a salvage value of 40,000 dollars. Based off of future forecasts, the following revenues and costs of the project are as follows:
Commission to parks
Insurance
Maintenance
Net Income:
The companies discount rate is 15%
Nico’s would be able to sell the old machines at a value of 10,000 dollars
Compute the NPV of the project.
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