This is based on Net Present Value and example for a project. Please show work for a guideline.
1.) Determine the Net Present Value of a machine that makes little plastic boxes to hold a variety of playing cards. The machine requires an initial investment of $750,000 and will return $200,000 in cash flow per year for exactly five years. The relevant discount rate is 8%.
2.) Determine the Net present Value of a machine that takes little plastic boxes to hold a variety of playing cards. The machine requires an initial investment of $750,000 and will return $200,000 in cash flow per year for exactly five years. The relevant discount rate is 11%.
3.) The initial investment is $200,000 and dentist hopes the laser will NOT become obsolete for six years. She expects to increase the volume of patients in her offline because not only is the laser painless, it is fast. Cash flows are expected to be $60,000 for the first two years. $75,000 for the next two years and $90,000 for the final two years of the life of the asset. The dentists requires a 7.5% return on dental equipment.
A.) Determine the net present value of the laser.
B.) Determine the net present value of the laser if the initial investment increases to $250,000.