Concose Park Department is considering a new capital investment. The cost of the machine is $280,000. The annual cost savings if the new machine is acquired will be $165,000. The machine will have a 3-year life and the terminal disposal value is expected to be $35,000. There are no tax consequences related to this decision. If Concose Park Department has a required rate of return of 14%, which of the following is closest to the present value of the project?

Question

Quizplus · Accepted Answer

($165,000 × 2.322) + ($35,000 × 0.675) - $280,000 = $126,755

Concose Park Department Is Considering a New Capital Investment