Acc543 Managerial Accounting: E24-5B Heidi Kahn, manager of the Grand Music Hall

Acc543 Managerial Accounting Exercise 24-5B Determining the Present Value 
Heidi Kahn, manager of the Grand Music Hall, is considering the opportunity to expand the company’s concession revenues. Specifically, she is considering whether to install a popcorn machine. Based on market research, she believes that the machine could produce incremental cash inflows of $1,600 per year. The purchase price of the machine is $5,000. It is expected to have a useful life of three years and a $1,000 salvage value. Ms. Kahn has established a desired rate of return of 16 percent. 
a. Calculate the net present value of the investment opportunity. 
b. Should the company buy the popcorn machine?
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