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Beyer Company is considering the purchase of an asset for $180,000. It is expected to produce the following net cash flows. The cash flows occur
Beyer Company is considering the purchase of an asset for $180,000. 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 | $ | 82,000 | $ | 56,000 | $ | 74,000 | $ | 134,000 | $ | 50,000 | $ | 396,000 | ||||||||||||
a. Compute the net present value of this investment. b. Should Beyer accept the investment?
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 answers to the nearest whole dollar.) Year Net Cash Flows Present Value of 1 at 12% Present Value of Net Cash Flows $ 1 82,000 56,000 74,000 134,000 50,000 396,000 Totals $ $ 0 Amount invested Net present value $ 0 Complete this question by entering your answers in the tabs below. Required A Required B Should Beyer accept the investment? Should Beyer accept the investment?Step by Step Solution
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