The management of Idaho Corporation is considering the purchase of a new machine costing $430,000. The company's desired rate of return is 10%. The present value factors for $1 at compound interest of 10% for Years 1 through 5 are 0.909, 0.826, 0.751, 0.683, and 0.621, respectively. In addition to the foregoing information, use the following data in determining the acceptability of this investment: Year Income from Operations Net Cash Flow 1 $100,000 $180,000 2 40,000 120,000 3 20,000 100,000 4 10,000 90,000 5 10,000 90,000 The net present value for this investment is a.$(99,600) b.$(126,800) c.$25,200 d.$16,400
The management of Idaho Corporation is considering the purchase of a new machine costing $430,000. The company's desired rate of return is 10%. The present value factors for $1 at compound interest of 10% for Years 1 through 5 are 0.909, 0.826, 0.751, 0.683, and 0.621, respectively. In addition to the foregoing information, use the following data in determining the acceptability of this investment:
Year |
Income from Operations |
Net Cash Flow |
||
1 | $100,000 | $180,000 | ||
2 | 40,000 | 120,000 | ||
3 | 20,000 | 100,000 | ||
4 | 10,000 | 90,000 | ||
5 | 10,000 | 90,000 |
The
a.$(99,600)
b.$(126,800)
c.$25,200
d.$16,400
The management of Idaho Corporation is considering the purchase of a new machine costing $430,000. The company's desired rate of return is 10%. The present value factors for $1 at compound interest of 10% for Years 1 through 5 are 0.909, 0.826, 0.751, 0.683, and 0.621, respectively. In addition to the foregoing information, use the following data in determining the acceptability of this investment:
Year |
Income from Operations |
Net Cash Flow |
||
1 | $100,000 | $180,000 | ||
2 | 40,000 | 120,000 | ||
3 | 20,000 | 100,000 | ||
4 | 10,000 | 90,000 | ||
5 | 10,000 | 90,000 |
The net present value for this investment is
a.$(99,600)
b.$(126,800)
c.$25,200
d.$16,400
plzz explain it properly
Trending now
This is a popular solution!
Step by step
Solved in 2 steps