(Answered) Flatte restaurant is considering the purchase of a 11000

Management Studies

Flatte Restaurant is considering the purchase of a $11,000 soufflé maker. The soufflé maker has an economic life of four years and will be fully depreciated by the straight-line method. The machine will produce 2,500 soufflés per year, with each costing $2.90 to make and priced at $5.75. Assume that the discount rate is 16 percent and the tax rate is 34 percent.

What is the NPV of the project?

Should the company make the purchase?

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