Sensitivity analysis: Boulder Creek 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 values b. Determine the net present value of the equipment, assuming a desired rate of return of 12% and annual net cash flows of $400,000, 5600,000, 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 praesent value Annual Net Cash Flow $400,000 $600,000 $800,000 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, 5600,000, 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 $400,000 $600,000 $800,000 Net present value d. Determine the minimum annual net cash flow necessary to generate a positive net present value, assuming a desired rate of return of 12%. Round to the nearest dollar. Annual Net Cash Flows e. Boulder Creek Industries wish to invest in an equipment and the projections for the same is as follows: Net cash inflow $400,000 $600,000 $800,000 Net present value ($675,600) $454,400 $1,584,400 Based on the above information, when Boulder Creek industries accepts the project? () If the net cash flow is $600,000 (b) if the net cash flow is $800,000 Check My Work more Check My Work uses remaining Previous Next