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Muncy, Inc., is looking to add a new machine at a cost of $4,133,250. The company...

Muncy, Inc., is looking to add a new machine at a cost of $4,133,250. The company expects this equipment will lead to cash flows of $820,322, $863,275, $937,250, $1,019,610, $1,212,960, and $1,225,000 over the next six years. If the appropriate discount rate is 15 percent, what is the NPV of this investment? Round to two decimal places.

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Answer #1
Calculation of NPV i.e. net present value of investment
Year Cash flows Discount Factor @ 15% Present Value
A B C B x C
0 -$4,133,250.00 1 -$4,133,250.00
1 $820,322.00 0.869565217 $713,323.48
2 $863,275.00 0.756143667 $652,759.92
3 $937,250.00 0.657516232 $616,257.09
4 $1,019,610.00 0.571753246 $582,965.33
5 $1,212,960.00 0.497176735 $603,055.49
6 $1,225,000.00 0.432327596 $529,601.30
NPV -$435,287.38
NPV of the investment = -$435,287.38
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