read: Principles of Accounting, Chapter 22: Tools for Enterprise Performance Evaluation:http://www.principlesofaccounting.com/chapter-22/Part1Opening attacted file university inn to answer this part.P
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% |
0.90909 | 0.90909 | |
0.82645 | 1.73554 | |
0.75132 | 2.48685 | |
0.68301 | 3.16986 | |
0.62092 | 3.79079 |
What would be the net present value?