Title: Investment Analysis for a Manufacturing Machine
Required information [The following information applies to the questions displayed below]: Following is information on an investment in a manufacturing machine. The machine has zero salvage value. The company requires a 6% return from its investments.
Part 2 of 2
Initial investment Net cash flows Year 1 Year 2 Year 3
$400,000
$48,050
$155,000 $92,000 $99,000
Assume that instead of a zero salvage value, as shown above, the machine has a salvage value of $31,500 at the end of its three-year life. Compute the machine's net present value. (PV of S1, FV of $1, PVA of S1, and EVA of S1) (Use appropriate factors from the tables)
Net Cash Flows
Present Value Factor
Present Value of Net Cash Flows
Year 1 Year 2 Year 3 Year 3 salvage value Totals Initial investment Net present value