What is the net present value of the investment

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Question - Management is considering buying an automated blood analysis machine that will significantly reduce the time for analyzing a blood sample. The machine will cost $80,000.00, and will be paid for with cash at the time of purchase. The machine's operating life is four years, and management expects it will be sold for scrap immediately, at the end of its operating life. The expected scrap price is $5,000.00. During its four year operating life, however, expected savings in annual variable costs should amount to roughly $30,000.00 (measured at the end of each year). The company's typical cost of capital is 8%. What is the net present value of the investment?

Reference no: EM132482796

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