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What is the machine net present value

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Reference no: EM133117815

Question - Cullumber Enterprises is considering investing in a new packing machine. The new machine will provide annual cash operating inflows of $10332 for 5 years. The cost of the machine is $35532 and it can be sold at the end of its 5-year useful life for $5712. Cullumber's required rate of return is 10%.

Type of cash flow

Periods

Interest rate

Factor

PV of $1

5

10%

0.6209

FV of $1

5

10%

1.6105

PV ordinary annuity

5

10%

3.7908

FV ordinary annuity

5

10%

6.1051

PV annuity due

5

10%

4.1699

Required - What is the machine's net present value?

a) $10,420

b) $13,879

c) ($88)

d) $7,182

Reference no: EM133117815

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