# Question & Answer: The management of Opry Company, a wholesale distributor of suntan products, is…..

 The management of Opry Company, a wholesale distributor of suntan products, is considering the purchase of a \$23,000 machine that would reduce operating costs in its warehouse by \$3,600 per year. At the end of the machine’s 8-year useful life, it will have no scrap value. The company’s required rate of return is 10%. (Ignore income taxes.) Click here to view Exhibit 13B-2, to determine the appropriate discount factor(s) using table.

 Required: 1. Determine the net present value of the investment in the machine. (Negative amount should be indicated by a minus sign. Round discount factor(s) to 3 decimal places, intermediate and final answers to the nearest dollar amount. Omit the “\$” sign in your response.)

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Question & Answer: The management of Opry Company, a wholesale distributor of suntan products, is…..
GET AN ESSAY WRITTEN FOR YOU FROM AS LOW AS \$13/PAGE
 Net present value \$

Present value of inflows=\$3600*Present value of annuity factor(10%,8)

=\$3600*5.335

=\$19206.

Hence NPV=Present value of inflows-Present value of outflows

=\$19206-\$23000

=-\$3794(Negative NPV).