Emily459
contestada

The following present value factors are provided for use in this problem.



Periods Present Value
of $1 at 8% Present Value of an
Annuity of $1 at 8%
1 0.9259 0.9259
2 0.8573 1.7833
3 0.7938 2.5771
4 0.7350 3.3121
Xavier Co. wants to purchase a machine for $37,500 with a four year life and a $1200 salvage value. Xavier requires an 8% return on investment. The expected year-end net cash flows are $12,500 in each of the four years. What is the machine's net present value?
$(3901).
$3901.
$4783.
$(4783).
$42,283.

Respuesta :

The net present value of machine is $5982

What is investment?

An investment is an asset or item acquired with the goal of generating income or appreciation.

As, 4th Year Cash Flow

= Salvage Value + Expected End Year Net Cash Flow

= $1,200 + $12,500

= $13,700

Year     Cash flow ($)             PVF at 8%             Present value ($)

0               37,500                         1.000                     -36,300

1                  12,500                      0.9259                 11573.75

2                 12,500                      0.8573                 10716.25

3                  12,500                      0.7938                 9922.5

4                  13,700                      0.7350                  10069.5

Net value                   5982

Hence, net present value of machine is $5982

Learn more about this concept here:

https://brainly.com/question/16186541

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