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Herky Foods is considering acquisition of a new wrapping machine. By purchasing the machine, Herky will save money on packaging in each of the next 5 years, producing the series of cash inflows shown
following table: The initial investment is estimated at $1.38 million. Using a 5% discount rate, determine the net present value (NPV) of the machine given its expected operating cash inflows. Based on
the project's NPV, should Herky make this investment?
The net present value (NPV) of the new wrapping ma
Data table
(Click on the icon here in order to copy the contents of the data table below
into a spreadsheet.)
Year
Cash inflow
1
$441,600
2
$414,000
3
$331,200
4
$386,400
5
$220,800
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