Question: NET PRESENT VALUE Based upon the given information, calculate the NPV of this project and determine if it should be accepted: Investment in machine...$ 55,000

NET PRESENT VALUE

Based upon the given information, calculate the NPV of this project and determine if it should be accepted:

Investment in machine...$ 55,000

Net annual cash inflows.. 12,000

Working capital required. 10,000

Salvage value of equipment. 5,000

Life of project.. 7 years

Discount rate 10%

The working capital will be released at the end of the project. Should they buy this machine? SHOW CALCULATIONS FOR FULL CREDIT (NO RULER NEEDED).

Here are some present value tables you can use for this problem:

PRESENT VALUE TABLES

Present Value of $1

Periods

4%

6%

8%

10%

12%

14%

4

.855

.792

.735

.683

.636

.592

5

.822

.747

.681

.621

.567

.519

6

.790

.705

.630

.564

.507

.456

7

.760

.665

.583

.513

.452

.400

8

.731

.627

.540

.467

.404

.351

9

.703

.592

.500

.424

.361

.308

10

.676

.558

.463

.386

.322

.270

Present

Value

of

Annuity

Periods

4%

6%

8%

10%

12%

14%

4

3.630

3.465

3.312

3.170

3.037

2.914

5

4.452

4.212

3.993

3.791

3.605

3.433

6

5.242

4.917

4.623

4.355

4.111

3.889

7

6.002

5.582

5.206

4.868

4.564

4.288

8

6.733

6.210

5.747

5.335

4.968

4.639

9

7.435

6.802

6.247

5.759

5.328

4.946

10

8.111

7.360

6.710

6.145

5.650

5.216

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Accounting Questions!

Q:

NET PRESENT VALUE Based upon the given information, calculate the NPV of this project and determine if it should be accepted: Investment in equipment ...$117,000 Net annual cash inflows.. 22,000...

Q:

NET PRESENT VALUE Based upon the given information, calculate the net present value of this project and determine if it should be accepted: Investment in equipment ...$117,000 Net annual cash...

Q:

NET PRESENT VALUE Based upon the given information, calculate the net present value of this project and determine if it should be accepted: Investment in machine...$ 55,000 Net annual cash inflows.....

Q:

You helped me with a study guide yesterday and I am hoping to get your assistance with a study guide for accounting. I have attached the document. Please let me know if availible. If you invest...

Q:

use the excel sheet as a reference. NPV of the vans investment: $182,658.08 Hint: A. NPV of the vans investment: $182,658.08 B. The profitability index for the trucks investment: 1.18 Year 1 $175,000...

Q:

Please help with questions on page 14 assignment 01 - urgently need help tonight DSC2604/101/3/2016 Tutorial letter 101/3/2016 Financial Modelling DSC2604 Semesters 1 & 2 Department of Decision...

Q:

Session 2 Individual Assignment - IA2 Forecast the Net Present Value of a project given the cash inflows and cash outflows of the project. Then use this information to simulate the uncertainty of...

Q:

ASSIGNMENT 6: ACCOUNTING AND FINANCIAL MANAGEMENT QUESTION 1 1.1. Differentiate in detail between primary and secondary markets. 1.2. Discuss in detail the difference between money markets and...

Q:

I need help writing therecommendation to the CFO (not the executive summary). I have already completed the attached excel workbook. Introduction: You have recently been hired as a Financial Analyst...

Q:

Need help with this. Need to have the formulas added. will do the forcast myself in within that software. Session 2 Individual Assignment - IA2 Forecast the Net Present Value of a project given the...

Q:

Suppose that the amount of margarine in a randomly selected container follows an approximately normal distribution with mean of 250 g and a standard deviation of 1.4 g. a) Determine the 60th...

Q:

BestUvClass, Inc. has the choice between two types of machines. One costs less but has a shorter life expectancy. The first machine costs $9,000, will last for two years, and produce revenues of...

Q:

S4-11 I dentify lean production characteristics (Learning Objective 4) Indicate whether each of the following is characteristic of a lean production system or a traditional production system. a. A...

Q:

In outsourcing, a company takes an activity and gives it to another company to do for them. The outsourcing company manages that activity. Group of answer choices True False

Q:

3.46 A conference began at noon with two parallel sessions. The session on portfolio management was attended by 40% of the delegates, while the session on chartism was attended by 50%. The evening...

Q:

3.43 In Sipadan, Malaysia, there is a national park where up to 100 dolphins can be found. Suppose we randomly select two of them in one draw. a. What is the probability that we pick two females,...

Q:

3.44 An analyst is presented with lists of 4 stocks and 5 bonds. He is asked to predict, in order, the 2 stocks that will yield the highest return over the next year and the 2 bonds that will have...