A new machine costing $250,000 will provide the following cash flows: Year Amount 0 .........................................(250,000) 1 .........................................

Question:

A new machine costing $250,000 will provide the following cash flows:
Year Amount
0 .........................................(250,000)
1 ......................................... 30,000
2 ......................................... 60,000
3 ......................................... 95,000
4 ......................................... 125,000
5 ......................................... 60,000
6 ......................................... 3,000
7 ......................................... (25,000)
8 ......................................... 20,000
9 ......................................... 40,000
10 ........................................ 15,000
11 ........................................ 2,000
Required:
Calculate the net present value of these cash flows using a discount rate of 10%.
Net Present Value
What is NPV? The net present value is an important tool for capital budgeting decision to assess that an investment in a project is worthwhile or not? The net present value of a project is calculated before taking up the investment decision at...
Discount Rate
Depending upon the context, the discount rate has two different definitions and usages. First, the discount rate refers to the interest rate charged to the commercial banks and other financial institutions for the loans they take from the Federal...
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Related Book For  book-img-for-question

Financial Management for Decision Makers

ISBN: 978-0138011604

2nd Canadian edition

Authors: Peter Atrill, Paul Hurley

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