Brunette Company is contemplating investing in a new piece of manufacturing machinery. The amount to be invested is $180,000. The present value of the future cash flows generated by the project is $163,000. Should the company invest in this project? a. no, because the rate of return on the project is less than the desired rate of return used to compute the present value of the future cash flows b. yes, because the rate of return on the project exceeds the desired rate of return used to compute the present value of the future cash flows c. no, because the net present value is $17,000 d. yes, because the rate of return on the project is equal to the desired rate of return used to compute the present value of the future cash flows
Brunette Company is contemplating investing in a new piece of manufacturing machinery. The amount to be invested is $180,000. The present value of the future cash flows generated by the project is $163,000. Should the company invest in this project? a. no, because the rate of return on the project is less than the desired rate of return used to compute the present value of the future cash flows b. yes, because the rate of return on the project exceeds the desired rate of return used to compute the present value of the future cash flows c. no, because the net present value is $17,000 d. yes, because the rate of return on the project is equal to the desired rate of return used to compute the present value of the future cash flows
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Brunette Company is contemplating investing in a new piece of manufacturing machinery. The amount to be invested is $180,000. The present value of the future
cash flows generated by the project is $163,000. Should the company invest in this project?a. no, because therate of return on the project is less than the desired rate of return used to compute the present value of the future cash flowsb. yes, because the rate of return on the project exceeds the desired rate of return used to compute the present value of the future cash flowsc. no, because thenet present value is $17,000d. yes, because the rate of return on the project is equal to the desired rate of return used to compute the present value of the future cash flows
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