Follow the format shown in Exhibit 12B.1 and Exhibit 12B.2 as you complete the requirementbelow.Woodard Company wants to buy a numerically controlled (NC) machine to be used in producingspecially machined parts for manufacturers of trenching machines. The outlay required is$700,000. The NC equipment will last five years with no expected salvage value. The expectedafter-tax cash flows associated with the project follow:Year Cash Revenues Cash Expenses12345$1,400,0001,400,0001,400,0001,400,0001,400,000$1,200,0001,200,0001,200,0001,200,0001,200,000Required:Compute the investment's Net Present Value, assuming a required rate of return of 8 percent.Round present value calculations and your final answer to the nearest dollar.NPV = $X

NPV means Net Present value.It is a capital budgeting technique used for making investment…

Answered: Follow the format shown in Exhibit…

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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The production department is proposing the purchase ONE automatic insertion machine. It has identified three machines (A, B and C). Each machine has an estimated useful life of 10 years. minimum desired rate of return of 10%. The accountant has identified the following data: Machine A Machine B Machine C Present value of future cash flows computed using 10% rate of return $305,000 $295,000 $300,500 Amount of initial investment 300,000 300,000 300,000 Based on net present value method, which machine do you recommend?
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Jefferson Products Inc. is considering purchasing a new automatic press brake, which costs $320,000 including installation and shipping. The machine is expected to generate net cash inflows of $90,000 per year for 12 years. At the end of 12 years, the book value of the machine will be $0, and it is anticipated that the machine will be sold for $110,000. If the press brake project is undertaken, Jefferson will have to increase its net working capital by $100,000. When the project is terminated in 12 years, there will no longer be a need for this incremental working capital, and it can be liquidated and made available to Jefferson for other uses. Jefferson requires a 9 percent annual return on this type of project and its marginal tax rate is 40 percent. Use Table II and Table IV to answer the questions. Calculate the press brake's net present value. Round your answer to the nearest dollar.$ Is the project acceptable? The project is . What is the meaning of the computed net…

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