2. A company is evaluating the feasibility of investing in machinery to manufacture an automotive component. It would need to make an investment of $550,000 today, after which, it would have to spend...



2.
A company is evaluating the feasibility of investing in machinery to manufacture an automotive component. It would need to make an investment of $550,000 today, after which, it would have to spend $7,500 every year starting one year from now, for twelve years. At the end of the period, the machine would have a salvage value of $13,000. The company confirmed that it can produce and sell 8,450 components every year for twelve years and the net return would be $12.50 per component. The company's required rate of return is 6.00%.



a. What is the Net Present Value (NPV) of this investment option?



b. Is the investment option feasible?




Yes



No





Kindly keep all the decimals for all the procedures, DO NOT ROUND



Jun 09, 2022
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