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(Present value tables re needed) The Marties Machine company is looking to expan

ID: 2372688 • Letter: #

Question

(Present value tables re needed) The Marties Machine company is looking to expand its business by adding a new line of vending machines. The management team is considering expanding into either soda machines. Following is the relevant financial data relating to the decision:


Soda Machine Snack Machine

Investment $75,000 $50,000

Useful life (years) 5 10

Estimated annual net cash inflows $30,000 $18,000

for useful life

Residual value $30,000 $10,000

Dereciation method straight-line Straight-line

Required rate of return 8% 12%


What is the net present value for the soda machines?

Explanation / Answer

10500

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