Dendri Inc. is considering a new x-ray machine. The current machine is fully depreciated and would be discarded as it is old technology and has no market value. The new machine costs \$180,000.
The new machine is expected to generate \$50,000 additional after-tax cash flows in each of the five years of its useful life, after which it will have no salvage value.
What is the net present value (rounded to a whole number) of the investment if the required rate of return is 11%? Further, what is the recommended decision?
Hint: Your amounts may be slightly different if you use tables instead of a calculator or Excel because the tables round.