2) The Zeron Corporation wants to purchase a new machine for its factory operati

Question

2) The Zeron Corporation wants to purchase a new machine for its factory operations at a cost of $950,000. The investment is expected to generate $400,000 in annual cash flows for a period of four years. The required rate of return is 12%. The old machine can be sold for $50,000. The machine is expected to have zero value at the end of the four-year period. What is the net present value of the investment? Would the company want to purchase the new machine? Income taxes are not considered. $119,550; Yes $314,800; Yes $1,019,550; Yes $69,550; No

Explanation / Answer

$1,019,550; Yes

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