Answer to Question #129205 in Other for Fulufhelo

Question #129205
ABC Company is a successful biscuit manufacturer. Since it was established five years ago it has gradually increased its range of plain and cheese biscuits. The sales director has now come to the board with a proposal to expand the range further into chocolate coated biscuits. This will involve the purchase of new machinery; the initial outlay will be $135 000. The finance director and the sales director meet to discuss sales projections for the new range of chocolate biscuits. They forecast the following net cash inflows over the five year period until the machinery will need to be replaced:Year 1 35 000. Year 2 47 000. Year 3 52 000. Year 4 55 000. Year 5 55 000. In addition to these inflows, it is expected that the machinery will be sold for scrap at the end of year five for $10 000. The company’s policy is to depreciate machinery on the straight-line basis over its estimated useful economic life. The cost of capital
Calculate the Net Present Value (NPV)
1
Expert's answer
2020-08-17T10:10:06-0400
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