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The three common discounted cash flow methods are net present value, internal rate of return, and payback. O O True False Net initial investment in
The three common discounted cash flow methods are net present value, internal rate of return, and payback. O O True False Net initial investment in the project includes the acquisition of assets and any associated additions to working capital, minus the after-tax cash flow from the disposal of existing assets O O True False Diemia Hospital has been considering the purchase of a new x-ray machine. The existing machine is operable for five more years and will have a zero disposal price. If the machine is disposed now it may be sold for $160,000. The new machine will cost S620,000 and an additional cash investment in working capital of $85,000 will be required. The new machine will reduce the average amount of time required to take the x-rays and will allow an additional amount of business to be done at the hospital. The investment is expected to net S50,000 in additional cash inflows during the year of acquisition and $160,000 each additional year of use. The new machine has a five-year life, and zero disposal value. These cash flows will generally occur throughout the year and are recognized at the end of each year. Income taxes are not considered in this problem. The working capital investment will not be recovered at the end of the asset's life What is the net present value of the investment, assuming the required rate of return is 6%? Would the hospital want to purchase the new machine? Use the present value and future value tables the formule method, a financial calculator or a spreadsheet for your calculations. Use factor amounts rounded to three decimal places, X.XXX. Round intermediary currency computations and your final answer to the nearest whole dollar) O A. $125,190), no OB. $25,190 yes OC. $119,520 yes OD. $119,520, no
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