Question: Net present value Calculates the current value of a projects future cash flow. Discount tables are used to calculate the net present value. If the

Net present value

Calculates the current value of a projects future cash flow. Discount tables are used to calculate the net present value. If the NPV is positive, it could be worth investing, if it is negative it is not worth investing.

A new factory costs $1,000,000 to build and the discount factor is 6%.

Questions

Fill out the columns labelled discount factor and present value.
Comment on your results
Explain the advantages of this method
Explain any limitations of net present value

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 Finance Questions!

5. Assume that the investment involves an initial outlay of $100,000 with a five-year useful life and no salvage value under straight-line depreciation. The revenues are as follows: Year 1 - $10,000,...

Exercises: Cap. 6 -1, 2, 3 Cap. 8 - 1, 2, 3 , 6, 7, 8, 11, 13 Cap. 9 - 1, 2, 3, 13, 14 Cap. 10 - 1, 2, 4, 6, 8 Cap. 15 - 1, 4, 11, 12 Answers with all details REVIEW QUESTIONS 6-1 What is the real...

Book: Principles of Managerial Finance 14th edition Cap. 10 - 1, 2, 4, 6, 8 (Capital Budgeting Techniques) Cap. 15 - 1, 4, 11, 12 (Working Capital and Current Assets Management) REVIEW QUESTION 10-1...

See attached, let me know if you can help. Due date its next Monday, but I want to make sure I don't wait to the very last minute. Article Review format (two or three pages maximum) Abstract: One...

What is the range of investment horizons (in years) that the authors identified? What are the implications of such a wide range on the decision making process? 2. Is there a general consensus on what...

a a1. What is the range of investment horizons (in years) that the authors identified? What are the implications of such a wide range on the decision making process? 2. Is there a general consensus...

aaaaa1. What is the range of investment horizons (in years) that the authors identified? What are the implications of such a wide range on the decision making process? 2. Is there a general consensus...

please see attachment and answer all questions. prefer it in excel. 2. The Short-Line Railroad is considering a $190,000 investment in either of two companies. The cash flows are as follows: Year 1 $...

Keller Construction is considering two new investments. Project E calls for the purchase of earthmoving equipment. Project H represents an investment in a hydraulic lift. Keller wishes to use a net...

Many European nations fear the effects of genetically modified foods, so they choose to restrict their importation. The EU banned the entry of these foods and subjected them to strict labeling...

In Orange County, 51% of the adults are males. (It doesn't take too much advanced mathematics to deduce that the other 49% are females.) One adult is randomly selected for a survey involving credit...

Which of the following situations cannot be considered as a Merger?Daimler is the biggest German automaker and Chrysler in one of the top 3 US automakers. Both companies decided to join operations as...

Use the following balance of payments data for China (Mainland) from the IMF to answer Problems 1-4. 1. Is China experiencing a net capital inflow or outflow? 2. What is China's total for Groups A...

Use the following Chinese (Mainland) balance of payments data from the IMF to answer questions 3.10 through 3.13. 1. Is China experiencing a net capital inflow or outflow? 2. What is China's Total...

The Free Health Care Center (FH) charges each patient $ 5.50 (not quite free after all, but pretty close). Due to rising costs, the center has been forced to consider raising this charge to $ 6.00 or...

Microsoft develops, produces, and markets a wide range of computer software including the Windows operating system. On its recent financial statements, Microsoft reported the following information...

What are the five categories of motivational needs described by Maslow? Give an example of how each can be satisfied.

Tori and some other childeen experimented with balls to see which ones rolled. First using a piece of cardboard to use as a ramp, they angled it on a block to the floor to test the balls. Then Tori...

In an article in U.S. News & World Report, Dan McGraw described how two computer giants, DELL and COMPAQ, were poised to do battle in the personal computer market. Compaq had 13.2% of the U.S. market...

what is the problem with different countries having different accounting standards? For you as the president of a multinational company, what is the problem with different countries having different...

In the United States, accounting for inventory is a difficult issue. Inventory is comprised of those items either purchased or manufactured to be resold at a profit. Numerous methods are available to...