Incognito Company is contemplating the purchase of a machine that provides it with cash savings of...
Incognito Company is contemplating the purchase of a machine that provides it with cash savings of $85,000 per year for five years. Interest is 8%. Assume the cash savings occur at the end of each year. Required: Calculate the present value of the cash savings.
Calculate the present value of the cash savings
Homework Answers
Present Value of Cash Saving
= annual cash saving * present value annuity (8%,5)
= 85000 * ((1-(1.08)^-5)/.08)
= $339380
So the correct answer is $339380
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