Question

Joe is considering the purchase of a new machine that will produce widgets. The widget maker...

Joe is considering the purchase of a new machine that will produce widgets. The widget maker will require an initial investment of $10,000 and has an economic life of five years and will be fully depreciated by the straight line method. The machine will produce 1,500 widgets per year with each costing $2.00 to make. Each will be sold at $4.50. Assume Joe uses a discount rate of 14 percent and has a tax rate of 34 percent. What is the NPV of the project and should Joe  make the purchase.

Yes, NPV = 831.37

No, NPV = -932.02

Yes, NPV = 2,874.05

Yes, NPV= 1397.83

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Paul Restaurant is considering the purchase of a $11,100 soufflé maker. The soufflé maker has an...
Paul Restaurant is considering the purchase of a $11,100 soufflé maker. The soufflé maker has an economic life of 8 years and will be fully depreciated by the straight-line method. The machine will produce 1,600 soufflés per year, with each costing $2.80 to make and priced at $4.75. The discount rate is 12 percent and the tax rate is 25 percent.    What is the NPV of the project? (Do not round intermediate calculations and round your answer to 2...
Paul Restaurant is considering the purchase of a $10,200 soufflé maker. The soufflé maker has an...
Paul Restaurant is considering the purchase of a $10,200 soufflé maker. The soufflé maker has an economic life of 6 years and will be fully depreciated by the straight-line method. The machine will produce 1,400 soufflés per year, with each costing $2.40 to make and priced at $4.85. The discount rate is 13 percent and the tax rate is 21 percent.    What is the NPV of the project? (Do not round intermediate calculations and round your answer to 2...
Creole Restaurant is considering the purchase of a $9,500 soufflé maker. The soufflé maker has an...
Creole Restaurant is considering the purchase of a $9,500 soufflé maker. The soufflé maker has an economic life of five years and will be fully depreciated by the straight-line method. The machine will produce 1,750 soufflés per year, with each costing $2.50 to make and priced at $5.00. Assume that the discount rate is 12 percent and the tax rate is 30 percent. What is the NPV of the project?
Paul Restaurant is considering the purchase of a $10,500 soufflé maker. The soufflé maker has an...
Paul Restaurant is considering the purchase of a $10,500 soufflé maker. The soufflé maker has an economic life of 7 years and will be fully depreciated by the straight-line method. The machine will produce 1,400 soufflés per year, with each costing $2.70 to make and priced at $4.70. The discount rate is 11 percent and the tax rate is 24 percent.    What is the NPV of the project?
"Paul Restaurant is considering the purchase of a $9,300 soufflé maker. The soufflé maker has an...
"Paul Restaurant is considering the purchase of a $9,300 soufflé maker. The soufflé maker has an economic life of five years and will be fully depreciated by the straight-line method. The machine will produce 1,400 soufflés per year, with each costing $1.97 to make and priced at $4.95. The discount rate is 14 percent and the tax rate is 21 percent. Should the company make the purchase? "
Amy's Ice Cream Shop is considering the purchase of a $7500 ice cream maker. The ice...
Amy's Ice Cream Shop is considering the purchase of a $7500 ice cream maker. The ice cream maker has an economic life of five years and will be fully depreciated by the straight-line method. The machine will produce 1,300 cones per year, with each costing $2.15 to make and priced at $5.25. Assume that the discount rate is 14% and the tax rate is 34%. What is the NPV of the project? Should the company make the purchase?
Paul Restaurant is considering the purchase of a $9,400 soufflé maker. The soufflé maker has an...
Paul Restaurant is considering the purchase of a $9,400 soufflé maker. The soufflé maker has an economic life of 5 years and will be fully depreciated by the straight-line method. The machine will produce 1,300 soufflés per year, with each costing $2.60 to make and priced at $4.95. The discount rate is 10 percent and the tax rate is 23 percent. What is the NPV of the project? (Do not round intermediate calculations and round your answer to 2 decimal...
Paul Restaurant is considering the purchase of a $10,500 soufflé maker. The soufflé maker has an...
Paul Restaurant is considering the purchase of a $10,500 soufflé maker. The soufflé maker has an economic life of 7 years and will be fully depreciated by the straight-line method. The machine will produce 1,400 soufflés per year, with each costing $2.70 to make and priced at $4.70. The discount rate is 11 percent and the tax rate is 24 percent. What is the NPV of the project? (Do not round intermediate calculations and round your answer to 2 decimal...
Calculating Project NPVPaul Restaurant is considering the purchase of a $9,300 soufflé maker. The soufflé maker...
Calculating Project NPVPaul Restaurant is considering the purchase of a $9,300 soufflé maker. The soufflé maker has an economic life of five years and will be fully depreciated by the straight-line method. The machine will produce 1,400 soufflés per year, with each costing $1.97 to make and priced at $4.95. The discount rate is 14 percent and the tax rate is 21 percent. Should the company make the purchase? Please help by BAii plus not excel sheet
(a) Paul Restaurant is considering the purchase of a $9,300 soufflé maker. The soufflé maker has...
(a) Paul Restaurant is considering the purchase of a $9,300 soufflé maker. The soufflé maker has an economic life of five years and will be fully depreciated by the straight-line method. The machine will produce 1,400 soufflés per year, with each costing $1.97 to make and priced at $4.95. The discount rate is 14 percent and the tax rate is 21 percent. Calculate the NPV of the project? (b) We are evaluating a project that costs $604,000, has an 8-year...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT