Weimer Systems,Inc

question 69

Essay

Weimer Systems,Inc.is considering the purchase of a new machine that will cost the company $350,700.The machine is estimated to have an 8 year life and no salvage value.The machine is expected to generate $81,500 of net cash inflows each year over its useful life.Weimer's cost of capital is 15%.Ignoring income taxes,determine the maximum price Weimer should pay for this machine.What is the net-present-value of the investment in the machine? Should Weimer purchase the machine?

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Definitions:

Rate Of Return

A measure of the profitability of an investment, calculated as the percentage ratio of profit or loss to the initial investment cost.

Assigned

In derivatives trading, it refers to the notification that an option holder has decided to exercise their option.

Financial Executives

Individuals who manage financial planning, decision making, and control in an organization.

Accounting Values

The monetary amounts associated with assets, liabilities, equity, income, and expenses recorded in a company's financial statements.