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Purchase Price

Company Y purchase machine with 7 year life. Will generate cash flows of 9000 each year over 7 years. No salvage value at end of 7 years. Discount rate 10%, what is the purchase price of the machine is the npv is 17,000

A 43812
B 26812
C 17000
D 22195

Solution Preview

NPV = PV of inflows - purchase price
The inflows are $9,000 per year for ...

Solution Summary

The solution explains how to calculate the purchase price given the NPV.