(Ignore income taxes in this problem.) The management of Lassonde Corporation is considering the purchase of a machine that would cost $290,000, would last for 9 years, and would have no salvage value. The machine would reduce labor and other costs by $56,000 per year. The company requires a minimum pretax return of 8% 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 $56,000 over 9 years at the required rate of return of 8% and subtracting the initial investment of $290,000. The NPV is closest to $59,832.

(Ignore Income Taxes in This Problem