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    Nevland Corp: Compute Net Present Value of Proposed Project

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    Practice Problem 37. (Ignore income taxes in this problem.) Nevland Corporation is considering the purchase of a machine that would cost $130,000 and would last for 6 years. At the end of 6 years, the machine would have a salvage value of $18,000. By reducing labor and other operating costs, the machine would provide annual cost savings of $44,000. The company requires a minimum pretax return of 19% on all investment projects.

    The net present value of the proposed project is closest to:

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    Solution Summary

    This solution shows the cash flow, discounted factor, and discounted cash flow to calculate the net present value for the Neyland Corporation.