Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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QUESTION 34

  1. Advanced Products is considering the purchase of a computer-aided manufacturing system that requires an initial investment of $1,750,000 and is expected to provide an increase in net income of $200,000 and average annual cash benefits and savings of $250,000 each year for the next 10 years.  Their current cost of capital is 10%.  Following are selected factors from tables for 10 years at 10%:

    FV of $1

    FVOA

    PV of $1

    PVOA

    2.59374

    15.93742

    0.38554

    6.14457

     

    Required:  Compute the net present value of the investment

     

       

    $0

       

    $750,000

       

    $(213,857.50)

       

    $1,000,000

     

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