10.3 Net present value: Crescent Industries management is planning to replace some existing machinery in its plant. The cost of the new equipment and the resulting cash flows are shown in the accompanying table. If the firm uses an 18 percent discount rate for projects like this, should management go ahead with the project? Year Cash Flow -$3,300,000 1 875,123 2 966,222 3 1,145,000 4 1,250,399 1,504,445
10.3 Net present value: Crescent Industries management is planning to replace some existing machinery in its plant. The cost of the new equipment and the resulting cash flows are shown in the accompanying table. If the firm uses an 18 percent discount rate for projects like this, should management go ahead with the project? Year Cash Flow -$3,300,000 1 875,123 2 966,222 3 1,145,000 4 1,250,399 1,504,445
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Can I get the answer to 10.3 please.
Transcribed Image Text:10.2 Net present value: Kingston, Inc. management is considering purchasing a new machine at
a cost of $4,133,250. They expect this equipment to produce cash flows of $814,322, $863,275,
$937,250, $1,017,112, $1,212,960, and $1,225,000 over the next six years. If the appropriate
discount rate is 15 percent, what is the NPV of this investment?
10.3 Net present value: Crescent Industries management is planning to replace some existing
machinery in its plant. The cost of the new equipment and the resulting cash flows are shown in
the accompanying table. If the firm uses an 18 percent discount rate for projects like this, should
management go ahead with the project?
Year
Cash Flow
-$3,300,000
1
875,123
2
966,222
3
1,145,000
4
1,250,399
1,504,445
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