8. 100 points 8. value 1.00 points The management of Urbine Corporation is consi

Question

8. 100 points 8. value 1.00 points The management of Urbine Corporation is considering the purchase of a machine that would cost $300,000 would last for 6 years, and would have no salvage value. The machine would reduce labor and other costs by $60,000 per year. The company requires a minimum pretax return of 12% on all investment projects. (Ignore income taxes in this problem.) Click here to view Exhibit 138-1 and Exhibit 13B-2 to determine the appropriate discount factorís) using ables The net present value of the proposed project is closest to: (Round discount factor(s) to 3 decimal places, intermediate and final answers to the nearest dollar amount) O -$53,340 O -$3,340 O-$78690 O -$78,690 -$27,990 O -$27990

Explanation / Answer

8.NPV

=-300000+60000(1-(1+.12)^-6)/.12

=300000+60000(4.111)

=53340

9. NPV

=-210000+38000(1-(1+.11)^-9)/.11+28000(1+.11)^-9

=-210000+38000(5.537)+28000(.391)

=11354

10.

a.

Project x=-26000+7000(1-(1+.12)^-6)/.12

=-26000+7000(4.111)

=-26000+28777

=2777

Project y=-26000+50000(1+.12)^-6

=-26000+50000(.507)

=-26000+25350

=-650

Alternative x should b selected

b.

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