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What is the npv of the machine

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You purchase a new lathe for your shop. It costs $8,000 and will expand your business cash flow by $1,400/year in year 1 and these will grow by 5% per year. The system will work for 8 years before you have to replace it. What is the NPV (use a 4% discount rate? The vendor offers you an extended warranty costing $13,000 on top of the purchase price. This warranty extends the lathe's life by 8 years.

a. What is the NPV of the machine with the extended warranty?

b. Should you get it?

Reference no: EM132664083

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