Caine Bottling Corporation is considering the purchase of a new bottling machine. The machine would cost $180,000 and has an estimated useful life of 8 years with zero salvage value. Management estimates that the new bottling machine will provide net a cash flows of $34,000. Management also believes that the new bottling machine will save the company money because it is expe to be more reliable than other machines, and thus will reduce downtime. Assume a discount rate of 12%. Click here to view the factor table. Calculate the net present value. (If the net present value is negative, use either a negative sign preceding the number eg-45 or parenthe (45). For calculation purposes, use 5 decimal places as displayed in the factor table provided. Round present value answer to O decimal pl e.g. 125.) Net present value $ How much would the reduction in downtime have to be worth in order for the project to be acceptable? (Round answer to 0 decin places, e.g. 125.)
Caine Bottling Corporation is considering the purchase of a new bottling machine. The machine would cost $180,000 and has an estimated useful life of 8 years with zero salvage value. Management estimates that the new bottling machine will provide net a cash flows of $34,000. Management also believes that the new bottling machine will save the company money because it is expe to be more reliable than other machines, and thus will reduce downtime. Assume a discount rate of 12%. Click here to view the factor table. Calculate the net present value. (If the net present value is negative, use either a negative sign preceding the number eg-45 or parenthe (45). For calculation purposes, use 5 decimal places as displayed in the factor table provided. Round present value answer to O decimal pl e.g. 125.) Net present value $ How much would the reduction in downtime have to be worth in order for the project to be acceptable? (Round answer to 0 decin places, e.g. 125.)
Fundamentals Of Financial Management, Concise Edition (mindtap Course List)
10th Edition
ISBN:9781337902571
Author:Eugene F. Brigham, Joel F. Houston
Publisher:Eugene F. Brigham, Joel F. Houston
Chapter12: Cash Flow Estimation And Risk Analysis
Section: Chapter Questions
Problem 10P: Dauten is offered a replacement machine which has a cost of 8,000, an estimated useful life of 6...
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Question
![Caine Bottling Corporation is considering the purchase of a new bottling machine. The machine would cost $180,000 and has an
estimated useful life of 8 years with zero salvage value. Management estimates that the new bottling machine will provide net annual
cash flows of $34,000. Management also believes that the new bottling machine will save the company money because it is expected
to be more reliable than other machines, and thus will reduce downtime. Assume a discount rate of 12%.
Click here to view the factor table.
Calculate the net present value. (If the net present value is negative, use either a negative sign preceding the number eg -45 or parentheses eg
(45). For calculation purposes, use 5 decimal places as displayed in the factor table provided. Round present value answer to 0 decimal places,
e.g. 125.)
Net present value $
How much would the reduction in downtime have to be worth in order for the project to be acceptable? (Round answer to O decimal
places, e.g. 125.)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F8c06aa20-5ec8-4777-b1a1-6584a73dc238%2F52bf9e28-5a33-400a-8e47-6588188708f3%2F8310xhe_processed.png&w=3840&q=75)
Transcribed Image Text:Caine Bottling Corporation is considering the purchase of a new bottling machine. The machine would cost $180,000 and has an
estimated useful life of 8 years with zero salvage value. Management estimates that the new bottling machine will provide net annual
cash flows of $34,000. Management also believes that the new bottling machine will save the company money because it is expected
to be more reliable than other machines, and thus will reduce downtime. Assume a discount rate of 12%.
Click here to view the factor table.
Calculate the net present value. (If the net present value is negative, use either a negative sign preceding the number eg -45 or parentheses eg
(45). For calculation purposes, use 5 decimal places as displayed in the factor table provided. Round present value answer to 0 decimal places,
e.g. 125.)
Net present value $
How much would the reduction in downtime have to be worth in order for the project to be acceptable? (Round answer to O decimal
places, e.g. 125.)
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