Question
Salsa Company is considering an investment in technology to improve its operations. The investment costs $247,000 and will yield the following net cash flows.
Salsa Company is considering an investment in technology to improve its operations. The investment costs $247,000 and will yield the following net cash flows. Management requires a 7% return on investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1) Note: Use appropriate factor(s) from the tables provided. Year Net cash Flow 1 $ 48,000 2 3 52,600 76,200 4 94,600 5 125,400 Required: 1. Determine the payback period for this investment. 2. Determine the break-even time for this investment. 3. Determine the net present value for this investment. 4. Should management invest in this project based on net present value? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Determine the payback period for this investment. Note: Enter cash outflows with a minus sign. Round your Payback Period answer to 1 decimal place. Year Net Cash Flows Cumulative Net Cash Flows Initial investment $ (247,000) Year 1 48,000 Year 2 52,600 Year 3 76,200 Year 4 94,600 Year 5 125,400 Payback period Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Year Net Cash Flows Determine the break-even time for this investment. Note: Enter cash outflows with a minus sign. Round your break-even time answer to 1 decimal place. Cumulative Present Value of Net Cash Flows Present Value of Present Value of Net 1 at 7% Cash Flows per Year Initial investment $ (247,000) Year 1 Year 2 Year 3 0 Year 4 Year 5 Break-even time = years < Required 1 Required > 0 0 Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Determine the net present value for this investment. Net present value < Required 2 Required 4 > Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Should management invest in this project based on net present value? Should management invest in this project based on net present value? < Required 3 Required 4 >
Step by Step Solution
There are 3 Steps involved in it
Step: 1
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-text-image.webp)
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Step: 3
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started