Colortex, Incorporated is considering the purchase of a new machine. The machine will cost $105,000. The firm currently generates an annual cash flow of $150,000 a year. It is expected
That the machine will increase annual cash flows to $170,000. The machine is expected to last 7
Years after which both its book value and market value will be zero. What is the NPV of the
New machine if Colortex requires a 14% return on this project?
A)-$19,234
B)+$174,909
C)+$37,857
D)+$624,012

Question

Quizplus · Accepted Answer

The Answer of Colortex, Incorporated is considering the purchase of a new machine. The machine will cost $105,000. The firm currently generates an annual cash flow of $150,000 a year. It is expected
That the machine will increase annual cash flows to $170,000. The machine is expected to last 7
Years after which both its book value and market value will be zero. What is the NPV of the
New machine if Colortex requires a 14% return on this project?
A)-$19,234
B)+$174,909
C)+$37,857
D)+$624,012

Colortex, Incorporated Is Considering the Purchase of a New Machine