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Should the bank proceed with the investment project

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Question: First National Bank of Yukon is considering installing three ATMs in its westside branch. The new machines are expected to cost $48,000 apiece. Installation costs will amount to about $16,000 per machine. Each machine has a projected useful life of 10 years. Due to rapid growth in the westside district, these three machines are expected to handle 180,000 cash transactions .per year. On average, each cash transaction is expected to save 32 cents in check processing costs. If First National has a 12 percent cost of capital, should the bank proceed with this investment project?

Reference no: EM131717273

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