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QUESTION 16 What is the NPV of the new machine project? The project would require an initial investment in equipment of $67,0
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The answer would be option E as none of the above answers are considering the terminal value of the project. Please refer to the tables below for the NPV values for Year 3 and Year 4.

3-Year
Year Cashflow Discount Factor PV of Cashflow
0 -67000 1.0000 -67000.00
1 21000 0.8666 18197.57
2 21000 0.7509 15769.13
3 21000 0.6507 13664.76
Terminal 45000 0.5639 25374.02
Net Present Value 6005.48
4-Year
Year Cashflow Discount Factor PV of Cashflow
0 -67000 1.0000 -67000.00
1 21000 0.8666 18197.57
2 21000 0.7509 15769.13
3 21000 0.6507 13664.76
4 21000 0.5639 11841.21
Terminal 45000 0.5639 25374.02
Net Present Value 17846.69
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