NPV, Finance Basics

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purchase a machine worth Shs.1,500,000 which will have a residue value Shs.200,000 after 5 years useful life. The saving in cost resulting from the use of this machine are:
Shs.
Year 1 800,000
Year 2 350,000
Year 3 -
Year 4 680,000
Year 5 775,000

Using NPV method, advise the company whether this machine should be purchased if the cut off rate is 14% and acceptable saving in cost is 12% of the cost of the investment.


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