A companynis considering a cost saving project, This involves purchasing a machine costing $ 70000...

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Accounting

A companynis considering a cost saving project, This involves purchasing a machine costing $ 70000 whichnwill result in annual savings (in real terms) On wage costs of $1000 and on material cost $400'
The following forecasts are made of the ratios of inflation each year for the next five years
wage costs 10%
material cost 5%
General prices 6%
The cost of capital of the company , in real terms , is 8.5%. Calculate the NPV of the project , assuming that the machine has a life of five years and no scrap value

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