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

Your instructor will guide you through the following examples.

1. Calculate the future value of a $2,000.00 investment in four years at 12% interest.

2. Calculate the present value of $25,000.00 received in four years at a 15% rate of return.

3. Lambert Company is considering the purchase of equipment costing $75,000.00 that will have a five-year useful life. Projected net cash flows from the investment are shown below. Determine the net present value of the investment, assuming a rate of return of 10%. Should the company purchase the equipment?

Data from present value factors

Transcribed Image Text:

Year 12345 Cash Flows $ 8,000.00 25,000.00 36,000.00 22,000.00 15,000.00