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Covington Corporation purchased a vibratory finishing machine for ​$15,000 in year 0. The useful life of...

Covington Corporation purchased a vibratory finishing machine for ​$15,000 in year 0. The useful life of the machine is 10 years, at the end of which the machine is estimated to have a salvage value of zero. The machine generates net annual revenues of ​$6,500.

The annual operating and maintenance expenses are estimated to be ​$800. If​ Covington's MARR is 10​%, how many years will it take before this machine becomes​ profitable? Assume that the cash flows occur continuously throughout the year.

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Answer #1

Note: Please note that Discounted Cash FLow = Net Inflow X Present Value Factor @ 10%

I have taken PV Factor upto 3 decimal places.

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