Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Carlin Company, which uses net present value to analyze investments, requires a 8% minimum rate of return. A staff assistant recently calculated a $800,000 machine's

Carlin Company, which uses net present value to analyze investments, requires a 8% minimum rate of return. A staff assistant recently calculated a $800,000 machine's net present value to be $96,400, excluding the impact of straight-line depreciation.

FV of 1 (i = 8%, n = 6):1.587

FV of a series of $1 cash flows (i = 8%, n = 6):7.336

PV of $1 (i = 8%; n = 6):0.630

PV of a series of $1 cash flows (i = 8%, n = 6):4.623

If Carlin ignores income taxes and the machine is expected to have a six-year service life, the correct net present value of the machine would be:

Multiple Choice

  • $96,400.
  • $302,700.
  • $765,500.
  • $196,400.
  • $(15,600).

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_2

Step: 3

blur-text-image_3

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

Financial Accounting Theory

Authors: William R. Scott, Patricia O'Brien

8th Edition

013416668X, 978-0134166681

More Books

Students also viewed these Accounting questions

Question

What is Accounting?

Answered: 1 week ago

Question

Define organisation chart

Answered: 1 week ago

Question

What are the advantages of planning ?

Answered: 1 week ago

Question

1. Background knowledge of the subject and

Answered: 1 week ago