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What would be the net present value

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Question - Michaels, Inc. purchased a machine for $75,000. The machine has a useful life of five years and no salvage value. Straight-line depreciation is to be used. The machine is expected to generate cash flow from operations, net of income taxes, of $25,000 in each of the five years. Michaels' expected rate of return is 10%. Information on present value factors is as follows:

Period

Present Value of $1 at 10%

Present value of ordinary annuity of $1 at 10%

1

0.90909

0.90909

2

0.82645

1.73554

3

0.75132

2.48685

4

0.68301

3.16986

5

0.62092

3.79079

What would be the net present value?

Reference no: EM132107546

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