Tocserp is considering the purchase of a new machine that will produce widgets. The widget maker...

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Finance

Tocserp is considering the purchase of a new machine that willproduce widgets. The widget maker will require an initialinvestment of $12,000 and has an economic life of five years andwill be fully depreciated by the straight line method. The machinewill produce 1,400 widgets per year with each costing $2.00 tomake. Each will be sold at $4.50. Assume Tocserp uses a discountrate of 14 percent and has a tax rate of 34 percent. What is theNPV of the project and should Tocserp make the purchase.
Please show work.
No, NPV = -1268.19
No, NPV = -3373.45
Yes, NPV = 15.78
No, NPV = -602.17

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Time line012345Cost of new machine12000Initial Investment outlay12000Unit sales14001400140014001400Profitsno ofunits sold sales price variable See Answer

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Tocserp is considering the purchase of a new machine that willproduce widgets. The widget maker will require an initialinvestment of $12,000 and has an economic life of five years andwill be fully depreciated by the straight line method. The machinewill produce 1,400 widgets per year with each costing $2.00 tomake. Each will be sold at $4.50. Assume Tocserp uses a discountrate of 14 percent and has a tax rate of 34 percent. What is theNPV of the project and should Tocserp make the purchase.Please show work.No, NPV = -1268.19No, NPV = -3373.45Yes, NPV = 15.78No, NPV = -602.17