Easton Excavation Company is planning an investment of $120,000 for a bulldozer. The bulldozer is expected to
Question:
a. Determine the equal annual net cash flows from operating the bulldozer.
b. Determine the net present value of the investment, assuming that the desired rate of return is 10%. Use the present value of an annuity of $1 table in the chapter (Exhibit 2). Round to the nearest dollar.
c. Should Easton invest in the bulldozer, based on this analysis?
d. Determine the number of operating hours such that the present value of cash flows equals the amount to be invested.
Exhibit 2:
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...
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Related Book For
Financial and Managerial Accounting Using Excel for Success
ISBN: 978-1111993979
1st edition
Authors: James Reeve, Carl S. Warren, Jonathan Duchac
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