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What is the net present value of the given project

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Reference no: EM131801555

Problem

The Gypsy Barrell Company is considering the purchase of a new machine costing $500,000. This machine is estimated to cost $15,000 per year in operating expenses but it will allow the company to earn an additional $120,000 per year in revenues. The machine will be depreciated using the straight-line method over its 10 year life. There is no expected salvage value at the end of its life. If the required rate of return is 15% what is the net present value of this project?

A$92,174
B$(223,966)
C$102,256
D$26,974.

Reference no: EM131801555

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