Question
Rutherford Inc. is considering to invest in an automated production system with the following anticipated cash flows. Compute the discounted cash flow that is appropriate
Rutherford Inc. is considering to invest in an automated production system with the following anticipated cash flows. Compute the discounted cash flow that is appropriate for each of the following items assuming a required rate of return of 10%. Entry Rules: Enter a positive number for cash inflow, a negative number for cash outflow, enter N/A if no cash flow occurs. Round your ANSWER to the nearest whole number. Examples: If your answer is $24,500.47 cash inflow, enter 24500 If your answer is $24,500.51 cash outflow, enter -24501 If your answer is that no cash flow occurs, enter N/A Never enter $ or , when inputting numerical answers. 1. The immediate payment of $315,900 required for the upgrade. 2. Straight-line depreciation of $35,100 per year for the long-term investment. 3. Annual savings in cash operating costs of $72,000 over the next 9 years 4. A refurbishment is required by the end of year 5 for the automated system to continue functioning, which will cost $22,000. 5. The system can be sold for $24,000 at the end of its service life. Part B: Compute the net present value of part A. (Use the rounded numbers you answered in Part A and round answers to the nearest dollar) Part C: Should the new long-term investment be taken on? Enter Y for yes, N for no.
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