Caine Bottling Corporation is considering the purchase of a new bottling machine. The machine would cost $193,900 and has anestimated useful life of 8 years with zero salvage value. Management estimates that the new bottling machine will provide net annualcash flows of $30,600. Management also believes that the new bottling machine will save the company money because it is expectedto be more reliable than other machines, and thus will reduce downtime. Assume a discount rate of 7%.Click here to view the factor table.Calculate the net present value. (If the net present value is negative, use either a negative sign preceding the number eg -45 or parentheses eg(45). For calculation purposes, use 5 decimal places as displayed in the factor table provided. Round present value answer to 0 decimal places,eg. 125.)Net present value$$How much would the reduction in downtime have to be worth in order for the project to be acceptable? (Round answer to O decimalplaces, e.g. 125.)111781962

YearCash flow 0-193900130600230600330600430600530600630600730600830600Discount rate 7%

Answered: Caine Bottling Corporation is…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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