gnore Income taxes in this problem.) Tangen Corporation is considering the purch
ID: 2543873 • Letter: G
Question
gnore Income taxes in this problem.) Tangen Corporation is considering the purchase of a machine that would cost $387000 and would last for 6 years. At the end of 6 years, the machine would have a salvage value of $83.500 By reducing labor and other operating costs the machine would provide annual cost savings of $104,700. The company requires a minimum pretax return of 14% on all Investment projects. The net present value of the proposed project is closest to Click here to vlew Exhlbit 88-1 and Exhibit 88-2 to determine the appropriate discount factor's) usling tables O $17898 O $58.254 O $103.678 $20,178Explanation / Answer
Present value of inflows=$104700*Present value of annuity factor(14%,6)+$83500*Present value of discounting factor(14%,6)
=$104700*3.889+$83500*0.456
=445,254.3(Approx)
NPV=Present value of inflows-Present value of outflows
=445,254.3-$387000
which is equalto
=$58254(Approx).
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.