First National Bank of Conway is considering installing two ATMs in its Southside branch. The new machines are expected to cost $31000 apiece. Installation costs will amount to about $14000 per machine. Each machine has a projected useful life of 9 years. Due to rapid growth in the Southside district, these two machines (combined) are expected to handle 51000 cash transactions per year. On average, each cash transaction is expected to save $0.21 in teller expenses. If First National has a 0.12 cost of capital, what is the NPV of this project?

39 0

Get full Expert solution in seconds

$1.97 ONLY

Unlock Answer

First National Bank of Conway is considering installing two ATMs in its Southside branch. The new machines are expected to cost $31000 apiece. Installation costs will amount to about $14000 per machine. Each machine has a projected useful life of 9 years. Due to rapid growth in the Southside district, these two machines (combined) are expected to handle 51000 cash transactions per year. On average, each cash transaction is expected to save $0.21 in teller expenses. If First National has a 0.12 cost of capital, what is the NPV of this project?

EXPERT ANSWER

YearcashflowsPVF @ 12%Present value
0-900001-90000
1107100.8928579562.5
2107100.7971948537.946
3107100.711787623.166
4107100.6355186806.399
5107100.5674276077.142
6107100.5066315426.019
7107100.4523494844.66
8107100.4038834325.589
9107100.360613862.133
NPV-32934