The Corporation is considering the purchase of a new machine to use in its packing department. The new machine will have an initial cost of $160,000, a useful life of 12 years and a $6000 residual value. The Corporation will realize $15,100 in annual savings for each of the machine's 12-year useful life. Given the Corporation's 5% required rate of return, the new machine will have a net present value (NPV) of: (Round any intermediary calculations and your final answer to the nearest dollar.)Present Value of $1Periods3%4%5%100.7440.6760.614110.7220.6500.585120.7010.6250.557130.6810.6010.530140.6610.5770.505150.6420.5550.481Present Value of Annuity of $1Periods3%4%5%108.5308.1117.722119.2538.7608.306129.9549.3858.8631310.6359.9869.3941411.29610.5639.8991511.93811.11810.380 ($137,173). ($29,511). ($22,827). ($26,169).

The present value function or concept can be used to determine the present value of a future sum or…

Answered: The Corporation is considering the…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 4P

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The Corporation is considering the purchase of a new machine to use in its packing department. The new machine will have an initial cost of $160,000, a useful life of 12 years and a $6000 residual value. The Corporation will realize $15,100 in annual savings for each of the machine's 12-year useful life. Given the Corporation's 5% required rate of return, the new machine will have a net present value (NPV) of: (Round any intermediary calculations and your final answer to the nearest dollar.)

Present Value of $1

Periods 3% 4% 5%

10 0.744 0.676 0.614

11 0.722 0.650 0.585

12 0.701 0.625 0.557

13 0.681 0.601 0.530

14 0.661 0.577 0.505

15 0.642 0.555 0.481

Present Value of Annuity of $1

Periods 3% 4% 5%

10 8.530 8.111 7.722

11 9.253 8.760 8.306

12 9.954 9.385 8.863

13 10.635 9.986 9.394

14 11.296 10.563 9.899

15 11.938 11.118 10.380

($137,173).

($29,511).

($22,827).

($26,169).

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