Florence is contemplating the purchase of a soda machine, which will be used to sell soft drinks to customers for $.75 each. The following estimates are available:
Initial outlay $3,500
Annual cash inflow $1,000
Cost of capital 10%
Estimated life 5 yrs
Estimated residual value 0
Determine the net present value of the soda machine.
The answer contains computation of Net present Value of the machine.