The management of Ocala Company is considering the purchase of a $25,000 machine that would reduce operating costs by $4,000 per year. At the end of the machine's 10 year useful life, it will have a zero salvage value. The company requires a 14% on all investment projects.
Required:
a) Net present value of the investment
b) Difference between the total, undiscounted, cash inflows and cash outflows, over the entire life of the machine.