Question: Exercise 24-2 Net present value LO P3 Beyer Company is considering the purchase of an asset for $205,000. It is expected to produce the following
Exercise 24-2 Net present value LO P3
Beyer Company is considering the purchase of an asset for $205,000. It is expected to produce the following net cash flows. The cash flows occur evenly within each year. Assume that Beyer requires a 15% return on its investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | Total | |||||||||||||||||||
| Net cash flows | $ | 64,000 | $ | 45,000 | $ | 90,000 | $ | 174,000 | $ | 41,000 | $ | 414,000 | ||||||||||||
a. Compute the net present value of this investment. (Round your answers to the nearest whole dollar.)
Present Present Value Net Cash Year Value of 1 of Net Cash Flows at 15% 4 Totals Amount invested Net present value b. Should Beyer accept the investment? O Yes O No
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