Joanette, Inc., is considering the purchase of a machine that would c.docx

• No School
• AA 1
• eduardmordy
• 3

This preview shows page 1 - 3 out of 3 pages.

Joanette, Inc., is considering the purchase of a machine that would cost \$570,000 and would last for 9 years, at the end of which, the machine would have a salvage value of \$57,000. The machine would reduce labor and other costs by \$117,000 per year. Additional working capital of \$3,000 would be needed immediately, all of which would be recovered at the end of 9 years. The company requires a minimum pretax return of 18% on all investment projects. (Ignore income taxes.) Click here to view Exhibit 12B-1 and Exhibit 12B-2 to determine the appropriate discount factor(s) using the tables provided. Required: Determine the net present value of

You've reached the end of your free preview.

Want to read all 3 pages?

Unformatted text preview: the project. (Negative amount should be indicated by a minus sign. Round your intermediate calculations and final answer to the nearest whole dollar amount.) Net present value The following data pertain to an investment proposal (Ignore income taxes.): Cost of the investment Annual cost savings Estimated salvage value Life of the project Discount rate \$48,000 \$14,000 \$ 4,000 5 years 10% Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using the tables provided. The net present value of the proposed investment is closest to: Multiple Choice 0 \$5,074 0 \$30,000 0 \$2,484 0 \$7,558...
View Full Document

• Fall '19

What students are saying

• As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

Kiran Temple University Fox School of Business ‘17, Course Hero Intern

• I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

Dana University of Pennsylvania ‘17, Course Hero Intern

• The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

Jill Tulane University ‘16, Course Hero Intern