You reckon that it will produce an inflow after operating

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1. A factory costs $800,000. You reckon that it will produce an inflow after operating costs of $170,000 a year for 10 years. If the opportunity cost of capital is 14%, what is the net present value of the factory? What will the factory be worth at the end of five years?

2. A machine costs $380,000 and is expected to produce the following cash flows:

Year

1

2

3

4

5

6

7

8

9

10

Cash flow($000s)

50

57

75

80

85

92

92

80

68

50

If the cost of capital is 12%, what is the machine's NPV?

Reference no: EM13567281

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