Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Elsie Moving Company is considering purchasing new equipment that costs $ 720 comma 000$720,000. Its management estimates that the equipment will generate cash flows asfollows:

Elsie Moving Company is considering purchasing new equipment that costs

$ 720 comma 000$720,000.

Its management estimates that the equipment will generate cash flows asfollows:

Year 1

$ 204 comma 000$204,000

2

204 comma 000204,000

3

268 comma 000268,000

4

268 comma 000268,000

5

156 comma 000156,000

The company's required rate of return is 10%. Using the factors in the table below, calculate the present value of the cash inflows. (Round all calculations to the nearest whole dollar.)

Present value of $1:

6%

7%

8%

9%

10%

1

0.943

0.935

0.926

0.917

0.909

2

0.890

0.873

0.857

0.842

0.826

3

0.840

0.816

0.794

0.772

0.751

4

0.792

0.763

0.735

0.708

0.683

5

0.747

0.713

0.681

0.650

0.621

A.

$ 802 comma 285$802,285

B.

$ 835 comma 128$835,128

C.

$ 790 comma 890$790,890

D.

$ 786 comma 857$786,857

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

Students also viewed these Accounting questions