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Evaluate what is the npv of the investment

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Question 1: Dr. John Smith wants to purchase a new lab machine. The initial cost of the machine is expected to be $75,000, plus an additional $5,000 to install. It will not take any additional staff. His accountant estimates that he will earn an additional $15,000 in the first year, increasing at 10% a year. The machine has a useful life of 5 years. The machine will also require he begin paying an annual maintenance fee of $5,000 at the beginning of each year, starting in Year 2. Assuming a cost of capital of 8%, what is the NPV of this investment? Assume no residual value for the machine.

Reference no: EM132496417

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