Net present value analysis

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Reference no: EM131292074

Net Present Value Analysis. Heston Farming Company would like to purchase a harvesting machine for $100,000. The machine is expected to have a life of 4 years, and a salvage value of $20,000. Annual maintenance costs will total $28,000. Annual savings are predicted to be $60,000. The company’s required rate of return is 11 percent.

Required:

Ignoring the time value of money, calculate the net cash inflow or outflow resulting from this investment opportunity.

Find the net present value of this investment using the format presented in Figure 8.2 "NPV Calculation for Copy Machine Investment by Jackson’s Quality Copies". Round to the nearest dollar.

Should the company purchase the harvesting machine? Explain.

Reference no: EM131292074

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