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Demonstrate or compute the net present value

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Reference no: EM132568932

NPV Company is considering to buy a new machine which cost P50,000. It will be a labor saving investment which will reduce payroll by P13,500 per year. Its useful life is 8 years and it will have zero salvage value. A minimum desired rate of return of 18% is used for capital investment decisions.

Information on present value factors is as follows:

Present value of P1 for 8 periods at 18% .266

Present value of an annuity of P1 for 8 periods 4.078

Required:

Question 1: Compute the net present value.

Reference no: EM132568932

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