Small Finance Task
April 21, 2024
Limited Corporation is looking to replace a machine that is expected to increase productivity
and, thereby, revenue. The cost of the machine is $100,000. Revenue is expected to increase
by $20,000 in the first year, $50,000 in the second year, and $80,000 in the third year. After the
third year, the company plans to substitute the machine with a higher performance one. The
alternative to this investment is to buy $100,000 in risky corporate bonds that currently yield 10% annually. Explain the feasibility of this project by computing the NPV. Present your computation and rationale for the decision Â
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