Cervantes Company Is Considering An Investment In A New Machine Managers At The Company Are Uncertain About The Economi 1 (22.85 KiB) Viewed 51 times
Cervantes Company Is Considering An Investment In A New Machine Managers At The Company Are Uncertain About The Economi 2 (22.85 KiB) Viewed 51 times
Cervantes Company is considering an investment in a new machine. Managers at the company are uncertain about the economic life of the machine, because of the speed of innovation in the technology. The machine requires an investment of $3 million. After-tax cash flows are estimated to be $596,303 each year the machine is operating and not obsolete). The company uses a 10 percent discount rate in evaluating capital investments. Use Exhibit A. Required: What is the minimum economic life of the machine (in whole years) that would be required for it to have a positive net present value? Minimum economice years
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