Calculate the net present value of this investment

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Reference no: EM133715936

Question: "UMPI Inc. is considering the purchase of a street paver machine for $225,000. The expected life of the machine will be three years, and it will have a salvage value of $25,000. Annual maintenance costs will total $7,500. Annual savings are predicted to be $92,500. The company's required rate of return is 8%. Ignoring the TVM, calculate the net cash inflow or outflow resulting from this investment opportunity. Be sure to prepare the schedule that clearly depicts the time frame of the cash flows.

1) Using the Present Value Factors for $1 at 8% noted above (table provided for reference), calculate the net present value of this investment (ignoring taxes)

2) Based on your answer in requirement 1: should UMPI purchase the street paver machine?

Reference no: EM133715936

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