Sibble Corporation is considering the purchase of a machine that would cost $440

Question

Sibble Corporation is considering the purchase of a machine that would cost $440,000 and would last for 5 years. At the end of 5 years, the machine would have a salvage value of $82,000. By reducing labor and other operating costs, the machine would provide annual cost savings of $99,000. The company requires a minimum pretax return of 13% on all investment projects. (Ignore income taxes.) 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.) a.) $47,291 b.) $91,817 c.) $9,817 d.) $136,343

Explanation / Answer

Answer : -$47291

Working Notes for the Above answer

We have been provided with the information as follow

Now we will calculate NPV of the project

Cost 440,000 Salvage Value 82000 Life 5 year 5 year Cost Savings 99000 minimum pretax return of 13% 13%

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