Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

A company is considering a $150,000 investment in machinery with the following net cash flows. The company requires a 10% return on its investments. (PV

image text in transcribedimage text in transcribed

A company is considering a $150,000 investment in machinery with the following net cash flows. The company requires a 10% 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.) Net Cash Flow Year 1 $9,000 Year 2 $ 26,000 Year 3 $50,000 Year 4 $38,000 Year 5 $101,000 (a) Compute the net present value of this investment. (b) Should the machinery be purchased? Complete this question by entering your answers in the tabs below. Required A Required B Compute the net present value of this investment. (Round your present value factor to 4 decimals. Round y to the nearest whole dollar.) Year Net Cash Flows Present Value Factor Present Value of Net Cash Flows Year 1 $ 9,000 Year 2 26,000 Year 3 Year 4 50,000 38,000 101,000 $ 224,000 Year 5 Totals $ 0 Initial investment Net present value $ 0 Complete this question by entering your answers in the tabs below. Required A Required B Should the machinery be purchased? Should the machinery be purchased? Yes

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Fundamentals Of Corporate Finance

Authors: Jonathan Berk, Peter DeMarzo, Jarrad Harford

5th Edition

0135811600, 978-0135811603

Students also viewed these Accounting questions