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    Net present Value

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    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.

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    Solution Summary

    The answer contains computation of Net present Value of the machine.