Hyper - go is considering buying a new water treatment system for its plant in Austin, Texas. The investment proposal passed the initial screening tests (payback and accounting rate of return) so the company now wants to analyze the proposal using the discounted cash flow methods. The water treatment system costs $77,000, has a ten-year life, and has no residual value. The estimated net cash inflows from environmental cleanup savings are $14,000 per year over its life. The company's required rate of return is 18%. (Click the icon to view Present Value of $1 table.) (Click the icon to view Present Value of Ordinary Annuity of $1 table.) Read the requirements. Requirement 1. Compute the water treatment system's NPV. (Enter any factor amounts to three decimal places, X.XXX. Use parentheses or a minus sign for a negative NPV.) Annuity PV Factor (i=18%, n=10) Net Cash Years Inflow Present Value Years 1- 10 Present value of annuity Year 0 Investment Net present value
Hyper - go is considering buying a new water treatment system for its plant in Austin, Texas. The investment proposal passed the initial screening tests (payback and accounting rate of return) so the company now wants to analyze the proposal using the discounted cash flow methods. The water treatment system costs $77,000, has a ten-year life, and has no residual value. The estimated net cash inflows from environmental cleanup savings are $14,000 per year over its life. The company's required rate of return is 18%. (Click the icon to view Present Value of $1 table.) (Click the icon to view Present Value of Ordinary Annuity of $1 table.) Read the requirements. Requirement 1. Compute the water treatment system's NPV. (Enter any factor amounts to three decimal places, X.XXX. Use parentheses or a minus sign for a negative NPV.) Annuity PV Factor (i=18%, n=10) Net Cash Years Inflow Present Value Years 1- 10 Present value of annuity Year 0 Investment Net present value
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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