(Ignore income taxes in this problem.) Anne, Inc., is considering the purchase of a machine that would cost $200,000 and would last for 8 years. At the end of 8 years, the machine would have a salvage value of $46,000. The machine would reduce labor and other costs by $31,000 per year. Additional working capital of $7,000 would be needed immediately. All of this working capital would be recovered at the end of the life of the machine. 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 Answer of (Ignore income taxes in this problem.) Anne, Inc., is considering the purchase of a machine that would cost $200,000 and would last for 8 years. At the end of 8 years, the machine would have a salvage value of $46,000. The machine would reduce labor and other costs by $31,000 per year. Additional working capital of $7,000 would be needed immediately. All of this working capital would be recovered at the end of the life of the machine. The company requires a minimum pretax return of 8% on all investment projects.
-The net present value of the proposed project is closest to:

(Ignore Income Taxes in This Problem