Final answer:
The NPV calculation requires specific cash flow amounts and investment costs at a 10% discount rate, which are not provided in the question. NPV is the difference between the present value of cash inflows and outflows, which helps determine the profitability of an investment. A positive NPV signifies a potentially profitable investment.
Step-by-step explanation:
To calculate the net present value (NPV) of a machine when Chovita's required rate of return is 10 percent, we need to discount the future cash flows from the machine back to their present value at this rate and then subtract the initial investment. Unfortunately, the information provided in the question does not include the specific cash flows or initial investment cost associated with the machine, so we cannot calculate the exact NPV.
However, NPV is a financial metric used to evaluate the profitability of an investment, where we take the present value of cash inflows and subtract the present value of cash outflows. A positive NPV indicates that the projected earnings (in present dollars) exceed the anticipated costs, making the investment potentially profitable.
If we were to have the cash flows, the formula for NPV is as follows:
NPV = (Cash inflow / (1 + r)^n) - Initial investment
Where 'r' is the required rate of return, and 'n' is the number of periods.