How do you calculate Annual net cash inflows and Net present Value?
The company estimates that the cost to operate the machine will be $12,500 per year. The present method of dipping chocolates costs $40,000 per year. In addition to reducing costs, the new machine will increase production by 5,000 boxes of chocolates per year. The company realizes a contribution margin of $0.7 per box. A 9% rate of return is required on all investments. (Ignore income taxes.)