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Hello, I would appreciate it if you can help me on this question. I figured out part a, but do not know how to get
Hello, I would appreciate it if you can help me on this question. I figured out part a, but do not know how to get the rest. Please do show work, thank you very much!
Sensitivity analysis: Boulder Creak Industries Boulder Creek Industries is considering an investment in equipment based on the following estimates: Cost of equipment $3,000,000 Residual value 200,000 Useful life 10 years a. Determine the net present value of the equipment, assuming a desired rate of return of 12% and annual net cash flows of $800,000. Use the present value tables appearing in **Exhibit 2 and 5 of this chapter. Net present value $ 1,584,400 b. Determine the net present value of equipment, assuming a desired rate of return of 12% and annual net cash flows of $400,000, $ 600,000, and $800,000. Use the present value tables (**Exhibit 2 and 5) provided in the chapter in determining your answer. If required, use the minus sign to indicate a negative net present value. $400,000 $600,000 $800,000 Annual Net Cash Flow Net present value $ c. Determine the net present value of the equipment, assuming a desired rate of return of 15% and annual net cash flows of $400,000, $600,000, and $800,000. Use the present value tables (**Exhibit 2 and 5) provided in the chapter in determining your answer. If required, use the minus sign to indicate a negative net present value. Annual Net Cash Flow Net present value $400,000 $600,000 $800,000 d. Determine the minimum annual net cash necessary to generate a positive bet present value, assuming a desired rate of return of 12%. Round to the nearest dollar. Annual Net Cash Flow $ ** EXHIBIT 2 is Present value of $1 at Compound Interest ** EXHIBIT 5 is Present Value of an Annuity of $1 at Compound Interest Screenshot Present Value of $1 at Compound Interest Exhibit 2 Partial Present Value of $1 Table Year 6% 12% 15% 20% oooo van WN- 0.943 0.890 0.840 0.792 0.747 0.705 0.665 0.627 0.592 0.558 10% 0.909 0.826 0.751 0.683 0.621 0.564 0.513 0.467 0.424 0.386 0.893 0.797 0.712 0.636 0.567 0.507 0.452 0.404 0.361 0.322 0.870 0.756 0.658 0.572 0.497 0.432 0.376 0.327 0.284 0.247 0.833 0.694 0.579 0.482 0.402 0.335 0.279 0.233 0.194 0.162 Year Exhibit 5 Partial Present Value of an Annuity Table -Nm Present Value of an Annuity of $1 at Compound Interest 6% 10% 12% 15% 0.943 0.909 0.893 0.870 1.833 1.736 1.690 1.626 2.673 2.487 2.402 2.283 3.465 3.170 3.037 2.855 4.212 3.791 3.605 3.353 4.917 4.355 4.111 3.785 5.582 4.868 4.564 4.160 6.210 5.335 4.968 4.487 6.802 5.759 5.328 4.772 7.360 6.145 5.650 5.019 20% 0.833 1.528 2.106 2.589 2.991 3.326 3.605 3.837 4.031 4.192 0 0Step by Step Solution
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