Kinloch Ltd has just purchased a new machine for $18,000.It will provide cash inflows of $5,000 per year for 5 years after which it will be sold as scrap for $1,000.If Kinloch's required rate of return is 10%,what is the NPV of this machine?

Question

Quizplus · Accepted Answer

The NPV is calculated by discounting the cash inflows and the scrap value at the required rate of return and subtracting the initial investment. The NPV is $1,576.

Kinloch Ltd Has Just Purchased a New Machine for $18,000