Question

Interior​ Products, Inc. is evaluating the purchase of a new machine to use in its manufacturing process. The new machine would cost $ 37 comma 000 and have a useful life of 5 years. At the end of the​ machine's life, it would have a residual value of $ 2 comma 100. Annual cost savings from the new machine would be $ 12 comma 000 per year for each of the 5 years of its life. Interior​ Products, Inc. has a minimum required rate of return of 18​% on all new projects. The net present value of the new machine would be closest​ toA $39,943. B.$52.943 C.$4,181 D.$1,238

Answer 1

According to Given Data

$1,444

According to attached question

C.$4,181

Step-by-step explanation:

Options are inconsistent with the data provided.

Net present value is the Net value all cash inflows and outflows in present value term. All the cash flows are discounted using a required rate of return.

Ne t present value of the machine is $1,444

Options are inconsistent with the data provided.

Workings are made in an MS Excel file, which is attached with this answer.

Original Question is attached with this answer, please find it.

According to correct data

Ne t present value of the machine is $4,181