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(Solved) Present Value of a Lump-Sum Periods 1 2 3 4 5 6 7 8 9 10 12 15 16 17 18 19 20 21 24 25 3% 0.9709 0.9426 0.9151 0.8885 0.8626 0.8375 0.8131 0.7894...


Hi I need help and an explanation on how to Calculate the net present value (NPV) of the new machine


M.T. Glass, Inc. is considering the acquisition of a new piece of heavy machinery to

replace an old, outdated machine currently used in its business operations. The new

machine would cost $180,000 and is expected to last 9 years. The new machine would

require a repair of $25,000 in year seven and another repair costing $8,000 in year

eight. In addition, purchasing this new machine would require an immediate investment

of $30,000 in working capital which would be released for investment elsewhere at the

end of the 9 years. The machine is expected to have a $10,000 salvage value at the end

of 9 years. The old, outdated machine costs $160,000 per year to maintain and run. The

new machine is only expected to cost $90,000 per year to maintain and run. M.T. Glass

has a cost of capital of 16% and an income tax rate of 40%.

Calculate the net present value (NPV) of the new machine. If your answer is negative,

place a minus sign in front of your answer with no spaces in between (e.g., -1234).

Do not use decimals in your answer.

You will need to use the present value table factors to answer this

question. I have attached that table to the files

 


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