Julio Company is considering the purchase of a new bubble packaging machine. If the machine will provide $24,000 annual savings for 12 years and can be sold for $52,000 at the end of the period, what is the present value of the machine investment at a 8% interest rate with savings realized at year end? Round your present value factor to three decimal places and final answer to the nearest dollar. (Click here to see present value and future value tables)
Julio Company is considering the purchase of a new bubble packaging machine. If the machine will provide $24,000 annual savings for 12 years and can be sold for $52,000 at the end of the period, what is the present value of the machine investment at a 8% interest rate with savings realized at year end? Round your present value factor to three decimal places and final answer to the nearest dollar. (Click here to see present value and future value tables)
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 13EA: Jullo Company is considering the purchase of a new bubble packaging machine. If the machine will...
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Julio Company is considering the purchase of a new bubble packaging machine. If the machine will provide $24,000 annual savings for 12 years and can be sold for
$52,000 at the end of the period, what is the present value of the machine investment at a 8% interest rate with savings realized at year end? Round your present
value factor to three decimal places and final answer to the nearest dollar.
(Click here to see present value and future value tables)
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When determining the present value of the machine, consider that there are two different cash flows (which require factors from two different tables).
Transcribed Image Text:Rate (i)
1%
2%
3%
5%
8%
10%
12%
15%
20%
1
0.990
0.980
0.971
0.952
0.926
0.909
0.893
0.870
0.833
2
0.980
0.961
0.943
0.907
0.857
0.826
0.797
0.756
0.694
3
0.971
0.942
0.915
0.864
0.794
0.751
0.712
0.658
0.579
4
0.961
0.924
0.888
0.823
0.735
0.683
0.636
0.572
0.482
0.952
0.906
0.863
0.784
0.681
0.621
0.567
0.497
0.402
0.942
0.888
0.837
0.746
0.630
0.564
0.507
0.432
0.335
7
0.933
0.871
0.813
0.711
0.583
0.513
0.452
0.376
0.279
8
0.924
0.853
0.789
0.677
0.540
0.467
0.404
0.327
0.233
9.
0.914
0.837
0.766
0.645
0.500
0.424
0.361
0.284
0.194
10
0.905
0.820
0.744
0.614
0.463
0.386
0.322
0.247
0.162
11
0.896
0.804
0.722
0.585
0.429
0.350
0.287
0.215
0.135
12
0.888
0.788
0.701
0.557
0.397
0.319
0.257
0.187
0.112
13
0.879
0.773
0.681
0.530
0.368
0.290
0.229
0.163
0.093
14
0.861
0.758
0.661
0.505
0.340
0.263
0.205
0.141
0.078
15
0.861
0.743
0.642
0.481
0.315
0.239
0.183
0.123
0.065
16
0.853
0.728
0.623
0.458
0.292
0.218
0.163
0.107
0.054
17
0.844
0.714
0.605
0.436
0.270
0.198
0.146
0.093
0.045
18
0.836
0.700
0.587
0.416
0.250
0.180
0.130
0.081
0.038
19
0.828
0.686
0.570
0.396
0.232
0.164
0.116
0.070
0.031
20
0.820
0.673
0.554
0.377
0.215
0.149
0.104
0.061
0.026
Present Value of $1 Table.
(u) poļuad
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