Question

DON Corp. is contemplating the purchase of a machine that will produce cash savings of $27,000...

DON Corp. is contemplating the purchase of a machine that will produce cash savings of $27,000 per year for five years. At the end of five years, the machine can be sold to realize cash flows of $5,700. Interest is 12%. Assume the cash flows occur at the end of each year. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)

Required:
Calculate the total present value of the cash savings. (Do not round intermediate calculations. Round your final answer to nearest whole dollar.)

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Answer #1

Total present value of the cash savings ( excluding salvage value) = $97,335.

Total present value of the cash savings ( including salvage value) = $100,567

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