Forms are provided in the Working Papers. Obtain the present value factors from the tables in the lesson illustrations.

Work these problems independently.

1. Calculate the future value of a $25,000.00 investment in five years at 8% interest.

2. Calculate the present value of $48,000.00 received in five years at a 10% rate of return.

3. Daniel Supply Company is considering the purchase of equipment costing $150,000.00 that will have a sevenyear useful life. Projected cash flows from the investment are shown below. Determine the net present value of the investment, assuming a rate of return of 8%. Should the company purchase the equipment?

Transcribed Image Text:

Year 1 Cash Flows $15,000.00 2345 6 599 25,000.00 35,000.00 50,000.00 35,000.00 25,000.00 10,000.00