Olsen Inc.purchased a $600,000 machine to manufacture a specialty tap for electrical equipment.The tap is in high demand and Olsen can sell all that it could manufacture for the next ten years.The government exempts taxes on profits from new investments in order to encourage capital investments.This legislation most likely will remain in effect in the foreseeable future.The equipment is expected to have ten years of useful life with no salvage value.The firm uses straight-line depreciation.The net cash inflow is expected to be $144,000 each year.Olsen uses a discount rate of 10% in evaluating its capital investments.The estimated net present value of this proposed investment (rounded to the nearest thousand)is:
Note: the PV annuity factor from Table 2,Appendix C,10%,10 years is 6.145.

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The Answer of Olsen Inc.purchased a $600,000 machine to manufacture a specialty tap for electrical equipment.The tap is in high demand and Olsen can sell all that it could manufacture for the next ten years.The government exempts taxes on profits from new investments in order to encourage capital investments.This legislation most likely will remain in effect in the foreseeable future.The equipment is expected to have ten years of useful life with no salvage value.The firm uses straight-line depreciation.The net cash inflow is expected to be $144,000 each year.Olsen uses a discount rate of 10% in evaluating its capital investments.The estimated net present value of this proposed investment (rounded to the nearest thousand)is:
Note: the PV annuity factor from Table 2,Appendix C,10%,10 years is 6.145.

Olsen Incpurchased a $600,000 Machine to Manufacture a Specialty Tap for for Electrical