Manufacturer of mini-doughnut machine markers

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Reference no: EM131002320

Beloit Co. is a manufacturer of mini-doughnut machine markers. Early in 2003 a customer asked Beloit to quote a price for a custom-designed doughnut machine to be delivered by he end of 2003. Once purchased, the customer intends to pace the machine in service in January 2004 and will use it for four years. The expected annual operating net cash flow is estimated to be $120,000. The expected salvage value of the equipment at the end of four years is about 10% of the initial purchase price. To expect a 15% required rate of return on investment, what would the maximum amount that should be spend purchasing the doughnut machine?

Reference no: EM131002320

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