Net present value is calculated using the following formula:

NPV = X * [(1+r)^n - 1]/[r * (1+r)^n]

here,

x=amount received per period

n= number of periods

r= rate of return

Plugging in the following figures:

Initial cost: $400,000.

Annual operating cash inflows: $100,000 each year

n= 8 years

Cost of capital: 14 %

The net present value is: 100,000,000*((1+0.14)^8-1)/(0.14*(1+0.14)^8) = $626,566.42 (rounded to the nearest cent).

Since this is higher than the initial payment, the machine is worth the initial investment.

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