Problem 1: The Crescent Company is considering the purchase of a new machine costing $200,000. This machine is estimated to cost $5,000 per year in operating expenses but it will allow the company to earn an additional $100,000 per year in revenues. However, on average, only 75% of sales are collected in the year of the sale, the remaining 25% are collected in the following year. At the end of 3 years the machine will have a salvage value of $10,000. If the required rate of return is 10% what is the net present value of this project? (Round the answer to nearest whole dollar.)
Problem 2: The following data pertains to an investment proposal:Required investment $75,000
Annual cost savings $18,000
Projected life of investment 8 years
Projected salvage value $4,000
Required rate of return 16%
Ignoring income taxes, the net present value of the proposed investment is: