Sibble Corporation is considering the purchase of a machine that would cost $350,000 and would last for 5 years. At the end of 5 years, the machine would have a salvage value of $20,000. By reducing labor and other operating costs, the machine would provide annual cost savings of $82,000. The company requires a minimum pretax return of 12% on all investment projects. Click here to view Exhibit 13B-1 and Exhibit 13B-2 to determine the appropriate discount factor(s) using tables. The net present value of the proposed project is closest to: (Round discount factor(s) to 3 decimal places, intermediate and final answers to the nearest dollar amount.) ?$34,390 Please show work so I understand this. Thanks!! Solution NPV of project = (Net annual cash flows x Annuity P.V. factor of 12% for 5 years) + P.V. of terminal or 5 th year cash flow at 12% discounting rate .

1. Sibble Corporation is considering the purchase of a machine that would cost $350,000 and would
last for 5 years. At the end of 5 years, the machine would have a salvage value of $20,000. By
reducing labor and other operating costs, the machine would provide annual cost savings of
$82,000. The company requires a minimum pretax return of 12% on all investment projects.
Click here to view Exhibit 13B-1 and Exhibit 13B-2 to determine the appropriate discount
factor(s) using tables.
The net present value of the proposed project is closest to: (Round discount factor(s) to 3
decimal places, intermediate and final answers to the nearest dollar amount.)
?$34,390
Please show work so I understand this. Thanks!!
The net present value of the proposed project is closest to: (Round discount factor(s) to 3
decimal places, intermediate and final answers to the nearest dollar amount.)
?$43,050
?$54,390
?$65,730
?$34,390
Please show work so I understand this. Thanks!!
Solution
NPV of project = (Net annual cash flows x Annuity P.V. factor of 12% for 5 years) + P.V. of
terminal or 5 th
year cash flow at 12% discounting rate