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How do demonstrate the net present value of the project

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Reference no: EM132598455

Boy-Boy , Incorporated , is considering the purchase of a machine that would cost R240,000 and would last for 5 years, at the end of which, the machine would have a salvage value of R48,000.

The machine would reduce labour and other costs by R62,000 per year.

Additional working capital of R7,000 would be needed immediately, all of which would be recovered at the end of five years. The company requires a minimum pretax return of 17% on all investment projects.

Required:

Question 1: Determine the net present value of the project. Show all your calculations.

Reference no: EM132598455

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