Calculate the net present value for the venture

Reference no: EM13209422

A business invested $12,000 in a piece of equipment which helped reduce labor costs by $2,000 annually and reduced rejects by an estimated $1,800 annually. After 5 years, the machine has to be replaced by a new machine for the same cost. However, the old machine could be sold as scrap for $750.

a. Calculate the rate of return for this venture.

b. If the company habitually earns 12% rate of return on their investment, calculate the net present value for the venture.

Reference no: EM13209422

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