Net Present Value Cause Company is planning to invest in a machine with a cost of $75,000, a useful life of five years, and no salvage value. The machine is expected to produce cash flow from operations of $20,000 in each of the five years. Cause’s required rate of return is 10%.   Calculate the net present value of the machine. should the company purchase the machine? why or not   Please show all work

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Chapter11: Capital Budgeting Decisions
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Net Present Value

Cause Company is planning to invest in a machine with a cost of $75,000, a useful life of five years, and no salvage value. The machine is expected to produce cash flow from operations of $20,000 in each of the five years. Cause’s required rate of return is 10%.

 

  • Calculate the net present value of the machine.
  • should the company purchase the machine? why or not

 

Please show all work 

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