Oriole Bottling Corporation is considering the purchase of a new bottling machine. The machine would cost $193,900 and has in estimated useful life of 8 years with zero salvage value. Management estimates that the new bottling machine will provide het annual cash flows of $30,600. Management also believes that the new bottling machine will save the company money ecause it is expected to be more reliable than other machines, and thus will reduce downtime. Assume a discount rate of 7%. Click here to view PV 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 O 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 0 ecimal places, e.g. 125.) -11178 32768

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
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Oriole Bottling Corporation is considering the purchase of a new bottling machine. The machine would cost $193,900 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 $30,600. 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 7%.
Click here to view PV 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 O 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.)
tA
-11178
32768
Transcribed Image Text:Oriole Bottling Corporation is considering the purchase of a new bottling machine. The machine would cost $193,900 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 $30,600. 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 7%. Click here to view PV 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 O 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.) tA -11178 32768
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