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A company is considering a $163,000 investment in machinery with the following net cash flows. The company requires a 10% return on its investments. (PV
A company is considering a $163,000 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)
Note: Use appropriate factor(s) from the tables provided.
Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
---|---|---|---|---|---|
Net Cash Flow | $10,000 | $28,000 | $54,000 | $41,000 | $109,000 |
(a) Compute the net present value of this investment.
(b) Should the machinery be purchased?
Table B. Present Value of an Annuity of 1 p=[11/(1+i)n]/i assuming an annual interest rate of 9% For (n=10,i=9%), the PV factor is 6.4177.$2,000 per year for 10 years is the equivalent of $12,835 today ($2,0006.4177). Table B.1* Present Value of 1 p=1/(1+i)n in 6 years from today? Using the factors of n=12 and i=5% (12 semiannual periods and a semianmual rate of 5% ), the factor is 0.5568. You would need to invest $2,784 today ($5,0000.5568) Compute the net present value of this investment. Note: Round your present value factor to 4 decimals. Round your final answers to the nearest whole dollar. Table B.4\$Future Value of an Annuity of 1 f=[(1+i)n1]/i an annual interest rate of 8% ? For (n=6,i=8%), the FV factor is 7.3359.$4,000 per year for 6 years accumulates to $29,343.60($4,0007.3359). Table B. 2 Future Value of 1 f=(1+i)n Using the factors of n=20 and i=2%(20 Should the machinery be purchasedStep by Step Solution
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