Jubilee Corporation is considering the purchase of a new machine costing 100000. Sales tax on the...
Question:
Jubilee Corporation is considering the purchase of a new machine costing 100,000.
Sales tax on the machine is 6%.
Freight costs to have the machine delivered will be $1,000.
Installation and setup costs will be an additional $3,000.
What is the net present value of the initial investment?
Determining the Total Value of Initial Investment:
A firm may purchase a new equipment or machinery for facilitating the manufacturing process. The total investment value in the equipment is the sum of all the associated costs incurred such as purchase price (excluding taxes) paid, indirect taxes paid, installment charges and transportation or freight charges.
Answer and Explanation: 1
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View this answerThe net present value of the given initial investment is $110,000.
The net present value of the investment
= Purchase price of the new machine +...
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