Q1) Management of Kunkel Company is thinking of purchasing of a $40,000 machine which would decrease operating costs by $7,000 per year. At the end of machine eight-year useful life, it will have zero scrap value. Company required rate of return is 12% on all investment projects.
1. Find out net present value of investment in machine.
2. prepare down the difference between total, undiscounted cash inflows and cash outflows over whole life of machine?