Question: answer question 5 usimg 4 please Year 1 2 3 4 After tax Net Income $ 90,000 80,000 40,000 30,000 $240.000 Net Cash Flow $210,000
Year 1 2 3 4 After tax Net Income $ 90,000 80,000 40,000 30,000 $240.000 Net Cash Flow $210,000 200,000 160.000 150,000 $720.000 The company requires a 15% rate of return from its investments. Year ! 10% 0.909 1.736 2.487 3.170 3.791 4.355 4.868 15% 0.870 1.626 2.283 2.855 3.353 3.785 4.160 20% 0.833 1.528 2.106 2.589 2.991 3.326 3.605 Calculate the net present value AND profitability index. Should the company purchase this equipment? Why or why not? Problem 5. Using the table in problem 4. calculate the internal rate of return on a $946.250 capital investment with annual net cash flows of S250,000 for each of the six years of its useful life Problem 4. XYZ Company is considering buying equipment for $600,000. The equipment has an estimated life of 4 years and no salvage value. The estimated net income and net cash flow from the investment are as follows: Year 1 2 3 4 After tax Net Income $ 90,000 80,000 40,000 30.000 S240,000 Net Cash Flow $210,000 200,000 160,000 150.000 S720,000 The company requires a 15% rate of return from its investments, Year 1 2 3 10% 0.909 1.736 2.487 3.170 3.791 4.355 4.868 15% 0.870 1.626 2.283 2.855 3.353 3.785 4.160 20% 0.833 1.528 2.106 2.589 2.991 3.326 3.605 Calculate the net present value AND profitability index. Should the company purchase this equipment Why or why not? Problem 5. Using the table in problem 4, calculate the internal rate of return on a $946, 250 capital investment with annual net cash flows of S250,000 for each of the six years of its useful life
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