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Please help me solve this question.
A company uses 10% as cost of capital.
Calculate the NPV of purchasing the machine based on the following:
*purchase price of $600000
* annual running costs of $45000 for next 5 years paid annually in arrears
* a residual value of $220000 at end of 5 yearsCost of the machine =60,000
Running costs = 45,000 * 6.1051 = 274,729.5
Less residual value = 22,000 / 1.1^5 = 13,660.269
Total = £321,069.231
I used an annuity table for the running costs, and if a course my answer could be wrong.
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