Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

ABC Company estimated that it can generate $ 4 2 , 0 0 0 per year in additional cash inflows for the next five years

ABC Company estimated that it can generate $42,000 per year in additional cash inflows for the next five years if it automates some of its production equipment at an investment cost of $150,000. ABC's discount rate is 10 percent. Present value factors: Present value of $1 for 5 years @ 10 percent =0.6209. Present value of an annuity of $1 for 5 years @ 10 percent =3.7908.
Calculate the following:
Present value of additional cash inflows = $
(Round your answer to two decimal places.)
Net present value of investment = $
(Round your answer to two decimal places.)
Investment decision =
(Yes/No)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored 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

Advanced Accounting

Authors: Floyd A. Beams, Joseph H. Anthony, Bruce Bettinghaus, Kenneth Smith

11th Edition

978-0132568968, 9780132568968

More Books

Students also viewed these Accounting questions

Question

=+How does it affect the steady-state rate of growth?

Answered: 1 week ago