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Your company is deciding whether to invest in a new machine. The new machine will increase cash flow by $322,000 per year.
Your company is deciding whether to invest in a new machine. The new machine will increase cash flow by $322,000 per year. You believe the technology used in the machine has a 10-year life; in other words, no matter when you purchase the machine, it will be obsolete 10 years from today. The machine is currently priced at $1,720,000. The cost of the machine will decline by $105,000 per year until it reaches $1,195,000, where it will remain.
If your required return is 13 percent, calculate the NPV if you wait to purchase the machine until the indicated year.
NPV: Year 1$______ Year 2$______ Year 3$______ Year 4$ ______ Year 5$ ______ Year 6$______
