HI Corporation Is Considering the Purchase of a Machine That

Essay

HI Corporation is considering the purchase of a machine that promises to reduce operating costs by the same amount for every year of its 5-year useful life. The machine will cost $205,980 and has no salvage value. The machine has a 14% internal rate of return. (Ignore income taxes.)Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using the tables provided.Required:What are the annual cost savings promised by the machine?