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Net present Value

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.

Solution Summary

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