(Ignore income taxes in this problem.) Tangen Corporation isconsidering the purchase of a machine that would cost $394,000 andwould last for 6 years. At the end of 6 years, the machine wouldhave a salvage value of $87,000. By reducing labor and otheroperating costs, the machine would provide annual cost savings of$105,400. The company requires a minimum pretax return of 14% onall investment projects. The net present value of the proposedproject is closest to:
Click here to view Exhibit 8B-1 and Exhibit 8B-2 to determinethe appropriate discount factor(s) using tables.
(Ignore income taxes in this problem.) Tangen Corporation isconsidering the purchase of a machine that would cost $394,000 andwould last for 6 years. At the end of 6 years, the machine wouldhave a salvage value of $87,000. By reducing labor and otheroperating costs, the machine would provide annual cost savings of$105,400. The company requires a minimum pretax return of 14% onall investment projects. The net present value of the proposedproject is closest to:
Click here to view Exhibit 8B-1 and Exhibit 8B-2 to determinethe appropriate discount factor(s) using tables.
Related questions
(Ignore income taxes in this problem.) The Finney Company isreviewing the possibility of remodeling one of its showrooms andbuying some new equipment to improve sales operations. Theremodeling would cost $100,000 now and the useful life of theproject is 12 years. Additional working capital needed immediatelyfor this project would be $20,000; the working capital would bereleased for use elsewhere at the end of the 12-year period. Theequipment and other materials used in the project would have asalvage value of $15,000 in 12 years. Finney's discount rate is15%. |
Click here to view Exhibit 8B-1 and Exhibit 8B-2 to determinethe appropriate discount factor(s) using tables. |
What would the annual net cash inflows from this project have tobe in order to justify investing in remodeling? (Round yourfinal answers to the nearest dollar amount.) |
A $7,918
B $27,613
C $6,266
D $20,929
