Company A is considering the purchase of a new machine that would lower cash outflow. The cost of the machine is 30,000. The annual reduction in cash flows is:
Year Amount
1 5000
2 8000
3 12000
4 14000
If the cost of capital is 10%, calculate the following:
-the net present value of benefits (pvb)
-the net present value of costs (pvc)
-the net present value (npv)
-based on these analysis, should company A buy the machine?