DON CorpIs Contemplating the Purchase of a Machine That Will Produce

question 36

Essay

DON Corp.is contemplating the purchase of a machine that will produce net after-tax cash savings of $20,000 per year for five years.At the end of five years,the machine can be sold to realize after-tax cash flows of $5,000.Interest is 12%.Assume the cash flows occur at the end of each year.
Required: Calculate the total present value of the cash savings.

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