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    Ohm Depot Co equipment purchase: PVB, NPV, Payback, Profitability index

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    The Ohm Depot Co. is currently considering the purchase of a new machine that would increase the speed of manufacturing electronic equipment and save money. The net cost of the new machine is $66,000. The annual cash flows have the following projections:
    Year Amount
    1 $21,000
    2 $29,000
    3 $36,000
    4 $16,000
    5 $8,000
    If the cost of capital is 10%, find the following:
    a. The PVB
    b. The NPV
    c. Payback
    d. PI

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    Solution Summary

    The expert examines OHM Depot Co equipment purchases. The PVB, NPV, payback and profitability index are determined.