(Ignore income taxes in this problem.) Steinmann Inc. is considering the acquisition of a new machine that costs $410,000 and has a useful life of 5 years with no salvage value. The incremental net operating income and incremental net cash flows that would be produced by the machine are:
-Consider only the cash flows for the third year. The present value of the net cash flows (cash inflows less cash outflows) for this year only is:

Question

(Ignore income taxes in this problem.) Steinmann Inc. is considering the acquisition of a new machine that costs $410,000 and has a useful life of 5 years with no salvage value. The incremental net operating income and incremental net cash flows that would be produced by the machine are: 
-Consider only the cash flows for the third year. The present value of the net cash flows (cash inflows less cash outflows) for this year only is:

Quizplus · Accepted Answer

The present value of the net cash flows for the third year is calculated by discounting the net cash flows of that year to the present value using the appropriate discount rate. The correct present value is $6,090.

(Ignore Income Taxes in This Problem