18 A company has a machine which will continue to function for the next five years, but gradually become less productive. Free cash flows for the existing machine are forecasted to be $81,198 in year 1, $59,616 in year 2, $37,675 in year 3, $10,872 in year 4 and $7,844 in year 5. A salesman is trying to convince a company to replace this machine with a new model. The replacement machine will require a net investment of $156,892 and is expected to generate free cash flow of $87,651 per year for the next 5 years. The company requires 13% return on capital investments of this sort and desires a 36-month pay back period. What is the net present value of this proposal? Enter your answer as a monetary amount rounded to four decimal places, but without the currency symbol. For example, if your answer is $90.1234, enter 90.1234. If you answer is less than zero, enter a negative value, like this: -90.1234 Type your answer...
18 A company has a machine which will continue to function for the next five years, but gradually become less productive. Free cash flows for the existing machine are forecasted to be $81,198 in year 1, $59,616 in year 2, $37,675 in year 3, $10,872 in year 4 and $7,844 in year 5. A salesman is trying to convince a company to replace this machine with a new model. The replacement machine will require a net investment of $156,892 and is expected to generate free cash flow of $87,651 per year for the next 5 years. The company requires 13% return on capital investments of this sort and desires a 36-month pay back period. What is the net present value of this proposal? Enter your answer as a monetary amount rounded to four decimal places, but without the currency symbol. For example, if your answer is $90.1234, enter 90.1234. If you answer is less than zero, enter a negative value, like this: -90.1234 Type your answer...
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
Transcribed Image Text:18
A company has a machine which will continue to function for the next five years, but gradually
become less productive. Free cash flows for the existing machine are forecasted to be $81,198 in
year 1, $59,616 in year 2, $37,675 in year 3, $10,872 in year 4 and $7,844 in year 5. A salesman is
trying to convince a company to replace this machine with a new model. The replacement machine
will require a net investment of $156,892 and is expected to generate free cash flow of $87,651 per
year for the next 5 years. The company requires 13% return on capital investments of this sort and
desires a 36-month pay back period.
What is the net present value of this proposal?
Enter your answer as a monetary amount rounded to four decimal places, but without the currency
symbol. For example, if your answer is $90.1234, enter 90.1234. If you answer is less than zero, enter a
negative value, like this: -90.1234
Type your answer...
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