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Determine the net present value

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Herky Foods is considering acquisition of a new wrapping machine. By purchasing the machine, Herky will save money on packaging in each of the next 5 years, producing the series of cash inflows shown in the following table:

Year Cash Inflow

1 $400,000

2 $375,000

3 $300,000

4 $350,000

5 $200,000

The initial investment is estimated at $1.25 million. Using a 6% discount rate, determine the net present value (NPV) of the machine given its expected operating cash inflows. Based on the project's NPV< should Herky make this investment?

The net present value (NPV) of the new wrapping machine is $___.

Reference no: EM132379881

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