The management of Serpas Corporation is considering the purchase of a machine th
ID: 2381706 • Letter: T
Question
The management of Serpas Corporation is considering the purchase of a machine that would cost $150,000, would last for 4 years, and would have no salvage value. The machine would reduce labor and other costs by $39,000 per year. The company requires a minimum pretax return of 13% on all investment projects. (Ignore income taxes.)
The net present value of the proposed project is closest to: (Round discount factor(s) to 3 decimal places, intermediate and final answers to the nearest dollar amount.)
The management of Serpas Corporation is considering the purchase of a machine that would cost $150,000, would last for 4 years, and would have no salvage value. The machine would reduce labor and other costs by $39,000 per year. The company requires a minimum pretax return of 13% on all investment projects. (Ignore income taxes.)
Click here to view Exhibit 13B-2 to determine the appropriate discount factor(s) using tables.
The net present value of the proposed project is closest to: (Round discount factor(s) to 3 decimal places, intermediate and final answers to the nearest dollar amount.)
The management of Serpas Corporation is considering the purchase of a machine that would cost $150,000, would last for 4 years, and would have no salvage value. The machine would reduce labor and other costs by $39,000 per year. The company requires a minimum pretax return of 13% on all investment projects. (Ignore income taxes.) The net present value of the proposed project is closest to: (Round discount factor(s) to 3 decimal places, intermediate and final answers to the nearest dollar amount.) $42,934 ?$34,014 $6,000 ?$49,361Explanation / Answer
cash outflows 150,000
NPV ?$34,014 (APPROX)
yr Cash inflows pv factor 1 39000 0.884956 34513.27 2 39000 0.783147 30542.72 3 39000 0.69305 27028.96 4 39000 0.613319 23919.43 p.v of expected cash flows 116004.4Related Questions
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