pter 13 Homework Saved Help Save &ExitSubmit; Check my work The management of Ku
ID: 2405242 • Letter: P
Question
pter 13 Homework Saved Help Save &ExitSubmit; Check my work The management of Kunkel Company is considering the purchase of a $29,000 machine that would reduce operating costs by $6.500 per year. At the end of the machine's five-year useful life, it will have zero salvage value. The company's required rate of return is 16% Click here to view Exhibit 138-1 and Exhibit 138-2. to determine the appropriate discount factorfs) using table. ts Required 1. Determine the net present value of the investment in the machine. 2. What is the difference between the total, undiscounted cash inflows and cash outflows over the entire life of the machine? eBook Hint Print Complete this question by entering your answers in the tabs below ferences Required 1 Required 2 Determine the net present value of the investment in the machine. (Negative amounts should be indicated by a minus sign. Round your final answer to the nearest whole dollar amount. Use the appropriate table to determine the discount factor(s).) Required 2> Prey 10f 41ll Next >Explanation / Answer
a)present value of cost saving = [PVA 16%,5* saving in operating cost]
= [3.27429*6500]
= 21282.89
Net present value =Present value of cost saving - Initial cost
= 21282.89 - 29000
= - 7717 rounded
2)Total undiscounted cash Inflow = 6500* 5 = 32500
Total undiscounted cash outflow= -29000
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