(Ignore income taxes in this problem) The management of Rousseau Corporation is considering the purchase of a machine that would cost $340,000, would last for 8 years, and would have no salvage value. The machine would reduce labor and other costs by $67,000 per year. The company requires a minimum pretax return of 15% on all investment projects. The net present value of the proposed project is closest to:

Question

Quizplus · Accepted Answer

The net present value (NPV) is calculated by discounting the annual savings of $67,000 at the required rate of return of 15% over 8 years and subtracting the initial investment of $340,000. The NPV is closest to -$39,371.

(Ignore Income Taxes in This Problem) the Management of Rousseau