Caine Bottling Corporation is considering the purchase of a new bottling machine. The machine would cost $193,900 and has an estimated useful life of 8 years with zero salvage value. Management estimates that the new bottling machine will provide net annual cash flows of $30,600, Management also believes that the new bottling machine will save the company money because it is expected to be more reliable than other machines, and thus will reduce downtime. Assume a discount rate of 7%. Click here to view the factor table. Calculate the net present value. (If the net present value is negative, use either a negative sign preceding the number eg-45 or parentheses eg (45). For calculation purposes, use 5 decimal places as displayed in the factor table provided. Round present value answer to 0 decimal places, eg 125) Net present value S How much would the reduction in downtime have to be worth in order for the project to be acceptable? (Round answer to 0 decimal places, eg. 125)
Caine Bottling Corporation is considering the purchase of a new bottling machine. The machine would cost $193,900 and has an estimated useful life of 8 years with zero salvage value. Management estimates that the new bottling machine will provide net annual cash flows of $30,600, Management also believes that the new bottling machine will save the company money because it is expected to be more reliable than other machines, and thus will reduce downtime. Assume a discount rate of 7%. Click here to view the factor table. Calculate the net present value. (If the net present value is negative, use either a negative sign preceding the number eg-45 or parentheses eg (45). For calculation purposes, use 5 decimal places as displayed in the factor table provided. Round present value answer to 0 decimal places, eg 125) Net present value S How much would the reduction in downtime have to be worth in order for the project to be acceptable? (Round answer to 0 decimal places, eg. 125)
Chapter14: Capital Structure Management In Practice
Section14.A: Breakeven Analysis
Problem 8P
Related questions
Question
![Caine Bottling Corporation is considering the purchase of a new bottling machine. The machine would cost $193,900 and has an
estimated useful life of 8 years with zero salvage value. Management estimates that the new bottling machine will provide net annual
cash flows of $30,600. Management also believes that the new bottling machine will save the company money because it is expected
to be more reliable than other rpachines, and thus will reduce downtime. Assume a discount rate of 7%.
Click here to view the factor table.
Calculate the net present value. (If the net present value is negative, use either a negative sign preceding the number eg-45 or parentheses eg
(45). For calculation purposes, use 5 decimal places as displayed in the factor table provided. Round present value answer to 0 decimal places,
eg. 125)
Net present value $
How much would the reduction in downtime have to be worth in order for the project to be acceptable? (Round answer to 0 decimal
places, e.g. 125.)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F9a4fc75e-5a0a-4417-af24-c1d284c337f4%2F995f4313-4574-4718-8b06-4d73175cf3c0%2F7e4quvm_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Caine Bottling Corporation is considering the purchase of a new bottling machine. The machine would cost $193,900 and has an
estimated useful life of 8 years with zero salvage value. Management estimates that the new bottling machine will provide net annual
cash flows of $30,600. Management also believes that the new bottling machine will save the company money because it is expected
to be more reliable than other rpachines, and thus will reduce downtime. Assume a discount rate of 7%.
Click here to view the factor table.
Calculate the net present value. (If the net present value is negative, use either a negative sign preceding the number eg-45 or parentheses eg
(45). For calculation purposes, use 5 decimal places as displayed in the factor table provided. Round present value answer to 0 decimal places,
eg. 125)
Net present value $
How much would the reduction in downtime have to be worth in order for the project to be acceptable? (Round answer to 0 decimal
places, e.g. 125.)
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