Pete's Precision Presses is considering purchasing a new press for $200,000. | ||||||
The press will save the company $60,000 per year in production costs for 7 years. | ||||||
After 7 years the press will have a value of $50,000. | ||||||
Depreciation is calculated over 7 years using straight-line. | ||||||
1. Calculate the Payback Period | ||||||
Should the company buy the press if its minimum ARR is 20%? | ||||||
3. Calculate the Net Present Value (NPV) of the press using 15% interest. | ||||||
Should the company buy the press using NPV? |
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