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11 September, 04:05

Vextra corporation is considering the purchase of new equipment costing $44,500. the projected annual cash inflow is $12,900, to be received at the end of each year. the machine has a useful life of 4 years and no salvage value. vextra requires a 12% return on its investments. the present value of an annuity of $1 for different periods follows: periods 12% 1 0.8929 2 1.6901 3 2.4018 4 3.0373 what is the net present value of the machine?

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  1. 11 September, 04:10
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    Net present value is

    Present value of annual cash flows-project investment

    Net present value

    12,900*3.0373-44,500 = (5,319)
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