Larson Manufacturing is considering purchasing a new injecti

Larson Manufacturing is considering purchasing a new injection-molding machine for $200,000 to expand its production capacity. It will cost an additional $25,000 to do the site preparation. With the new injection-molding machine installed, Larson Manufacturing expects to increase its revenue by $92,000 per year. The machine will be used for seven years, with an expected salvage value of S65,000. At an interest rate of 15% would the purchase of the in ection-molding machine be justified? Click the icon to view the interest factors for discrete compounding when 1-15% per year. The present worth of the project is . Round to the nearest dollar.)

Solution

PW = 182195
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		A	B	C	D	E	F	G	H
	Year	0	1	2	3	4	5	6	7
1	Machine Cost	-200000
2	Additional cost onsite preparation	-25000
3	Increase in Revenue		92000	92000	92000	92000	92000	92000	92000
4	Salvage Value								65000
5	After Cost Value	-225000	92000	92000	92000	92000	92000	92000	157000
6	Discount rate	15%
	NPV	182195	NPV(A6,B5:H5)+A5