The KANKULIA Imaging Company is considering the purchase of new 3-D printer and is comparing two models: the HK Affinity A17 and the Roland ARM-10. The A17 bulldozer costs $14,999, with a projected annual operating and maintenance cost of $1,650 and a salvage value $2,500 after 4 years. The ARM-10 model costs $6,995, with a projected annual operating and maintenance cost of $3,600 and a salvage value of $500 after four years.
-Find the net present value of the Roland ARM-10 model if the cash flows are discounted annually at 6%.

Question

Quizplus · Accepted Answer

The net present value (NPV) is calculated by discounting the cash flows at 6% annually. The initial cost is $6,995, and the annual operating cost is $3,600 for 4 years. The salvage value is $500. The NPV is calculated as: NPV = -$6,995 + ($3,600 / 1.06) + ($3,600 / 1.06^2) + ($3,600 / 1.06^3) + ($3,600 / 1.06^4) + ($500 / 1.06^4) = -$19,073.

The KANKULIA Imaging Company Is Considering the Purchase of New