table {mso-displayed-decimal-separator:"\."; mso-displayed-thousand-separator:"\,";} tr {mso-height-source:auto;} col {mso-width-source:auto;} td {padding-top:1px; padding-right:1px; padding-left:1px; mso-ignore:padding; color:black; font-size:11.0pt; font-weight:400; font-style:normal; text-decoration:none; font-family:Calibri, sans-serif; mso-font-charset:0; text-align:general; vertical-align:bottom; border:none; white-space:nowrap; mso-rotate:0;} .xl74 {text-align:left;} .xl75 {text-align:left; white-space:normal;} .xl77 {text-align:center;} .xl78 {white-space:normal;} .xl79 {font-weight:700;} .xl87 {color:#B11111; font-weight:700; text-align:left; white-space:normal;} .xl92 {font-weight:700; text-align:right; border-top:.5pt solid windowtext; border-right:none; border-bottom:none; border-left:.5pt solid windowtext; background:#79ADE5; mso-pattern:black none; white-space:normal;} .xl95 {font-weight:700; text-align:center; border-top:.5pt solid windowtext; border-right:none; border-bottom:none; border-left:.5pt solid windowtext; background:#79ADE5; mso-pattern:black none; white-space:normal;} .xl96 {border-top:none; border-right:none; border-bottom:none; border-left:.5pt solid windowtext;} .xl98 {text-align:right; border-top:none; border-right:none; border-bottom:none; border-left:.5pt solid windowtext; white-space:normal;} .xl111 {border-top:.5pt solid windowtext; border-right:none; border-bottom:none; border-left:none;} .xl137 {color:#C00000; font-weight:700;} .xl188 {border-top:none; border-right:.5pt solid windowtext; border-bottom:none; border-left:none; background:#FFFFAA; mso-pattern:black none; white-space:normal;} .xl190 {border:.5pt solid windowtext; background:#FFFFAA; mso-pattern:black none; white-space:normal;} .xl191 {border-top:.5pt solid windowtext; border-right:.5pt solid windowtext; border-bottom:none; border-left:none; background:#FFFFAA; mso-pattern:black none; white-space:normal;} .xl192 {border-top:none; border-right:.5pt solid windowtext; border-bottom:2.0pt double windowtext; border-left:none; background:#FFFFAA; mso-pattern:black none; white-space:normal;} .xl193 {text-align:center; border:.5pt solid windowtext; background:#FFFFAA; mso-pattern:black none;} .xl194 {border-top:none; border-right:.5pt solid windowtext; border-bottom:.5pt solid windowtext; border-left:none; background:#FFFFAA; mso-pattern:black none; white-space:normal;} .xl195 {border-top:.5pt solid windowtext; border-right:none; border-bottom:2.0pt double windowtext; border-left:none; background:#FFFFAA; mso-pattern:black none; white-space:normal;}

A company is considering a $272,000 investment in machinery with the following net cash flows. The company requires a 7% return on its investments.
Initial investment	$272,000
Required rate of return	7%
Required:
(a) Compute the net present value of this investment.
Period	Net Cash Flows	Present Value of Net Cash Flows
1	$65,000
2	55,000
3	160,000
4	90,000
5	55,000
Totals
Initial investment		(272,000)
Net present value
Verify the value of cell C18 using the NPV function
(b) Should the machinery be purchased?