Solution-Compute the net present value of each machine

Compute the net present value of each machine

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Reference no: EM13513681

Two new machines are being evaluated for possible purchase. Forecasts relating to the two machines are:

	Machine 1	Machine 2
Purchase price	$50,000	$60,000
Estimated life (straight-line depreciation)	4 years	4 years
Estimated scrap value	None	None
Annual cash benefits before income tax:
Year 1	$25,000	$45,000
Year 2	25,000	19,000
Year 3	25,000	25,000
Year 4	25,000	25,000
Income tax rate	40%	40%

Compute the net present value of each machine. (CGA, adapted)

Reference no: EM13513681

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Compute the net present value of each machine

Reference no: EM13513681

Reference no: EM13513681

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