A project being considered is a semiautomated packing unti, Ask an Expert

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A project being considered is a semiautomated packing unti that would cost $390,000 including installation. This project would use the 7 year MACRS schedule with no residual value. Wrapping machine was purcashed four years ago for $90,000 the wrapper has a current market value of $20,000. The packing unit will result in a saving in operating expenses of $90,000 per year. These expenses will increase by 5% per year over the 10 year economic life.

Given partial balance sheet: Current liabilities= $1,000,000; Mortage Bond= $5,143,000; Common Stock(500,000 shares)= $500,000; Contributed capital in excess of par= 2,000,000; Retained earnings= $8,640,210; total liablities and common equity= $17,283,210

What is the NPV of the packing machine?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M91782076

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