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Find the annual net cash flows of the investment

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Reference no: EM132964557

IBX Pty Ltd is considering the purchase of a new machine that is expected to save the company $79,000 at the end of each year in reduced wages. The machine costs $230,000, plus another $15,000 to be installed. It is expected to last for five years after which it can be sold as scrap for $45,000. Operating expenses (such as fuel and maintenance) are $9,000 pa.

Problem a) Determine the annual net cash flows of this investment

Problem b) Calculate the NPV if the required rate of return is 15% pa. Give your answer in dollars and cents to the nearest cent.

Reference no: EM132964557

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