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2. Beyer Company is considering the purchase of an asset for $230,000. It is expected to produce the following net cash flows. The cash flows

2.

Beyer Company is considering the purchase of an asset for $230,000. It is expected to produce the following net cash flows. The cash flows occur evenly within each year. Assume that Beyer requires a 12% return on its investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)

Year 1 Year 2 Year 3 Year 4 Year 5 Total
Net cash flows $ 70,000 $ 44,000 $ 76,000 $ 152,000 $ 36,000 $ 378,000

a. Compute the net present value of this investment. b. Should Beyer accept the investment?

Year Net Cash Flows Present Value of 1 at 12% Present Value of Net Cash Flows
1
2
3
4
5
Totals $0 $0
Amount invested
Net present value $0

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