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Pete's Precision Presses is considering purchasing a new press for $200,000. The press will save the...

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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