Manus Company is considering the purchase of a new high-speed machine for its factory. The machine will cost $170,000 and will save the company $42,000 per year in cash operating costs. The machine has an estimated useful life of five years and no expected salvage value. The company's cost of capital is 11%. Required: 1) Compute the net present value of this investment. 2) Using net present value as the only decision tool, is this an acceptable project? Why or why not?

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Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.