Hicks Company is considering an investment opportunity with the following expected net cash inflows: Year 1, $235,000; Year 2, $195,000; Year 3, $125,000. The company uses a discount rate of 6% and the initial investment is $365,000. LOADING... (Click the icon to view Present Value of $1 table.) LOADING... (Click the icon to view Present Value of Ordinary Annuity of $1 table.) Calculate the NPV of the investment. Should the company invest in the project? Why or why not? Use the following table to calculate the net present value of the project. (Enter any factor amounts to three decimal places, X.XXX.) Net Cash PV Factor Present Years Inflow (i = 6%) Value Present value of each year's inflow: 1 (n = 1) 2 (n = 2) 3 (n = 3) Total PV of cash inflows 0 Initial investment Net present value of the project
Hicks Company is considering an investment opportunity with the following expected net cash inflows: Year 1, $235,000; Year 2, $195,000; Year 3, $125,000. The company uses a discount rate of 6% and the initial investment is $365,000. LOADING... (Click the icon to view Present Value of $1 table.) LOADING... (Click the icon to view Present Value of Ordinary Annuity of $1 table.) Calculate the NPV of the investment. Should the company invest in the project? Why or why not? Use the following table to calculate the net present value of the project. (Enter any factor amounts to three decimal places, X.XXX.) Net Cash PV Factor Present Years Inflow (i = 6%) Value Present value of each year's inflow: 1 (n = 1) 2 (n = 2) 3 (n = 3) Total PV of cash inflows 0 Initial investment Net present value of the project
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Hicks
Company is considering an investment opportunity with the following expected net cash inflows: Year 1,
$235,000;
Year 2,
$195,000;
Year 3,
$125,000.
The company uses a discount rate of
6%
and the initial investment is
$365,000.
LOADING...
(ClickLOADING...
(ClickCalculate the NPV of the investment. Should the company invest in the project? Why or why not?
Use the following table to calculate the net present value of the project. (Enter any factor amounts to three decimal places, X.XXX.)
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Net Cash
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PV Factor
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Present
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Years
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Inflow
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(i = 6%)
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Value
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Present value of each year's inflow:
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1
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(n = 1)
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2
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(n = 2)
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3
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(n = 3)
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Total PV of
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0
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Initial investment
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Net present value of the project
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