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A company is considering a $150,000 investment in machinery with the following net cash flows. The company requires a 10 % return on its investments. Initial investment Required rate of return Required: (a) Compute the net present value of this investment. Period 1 5 Totals Initial investment Net present value $150,000 10% Net Cash Flows Verify the value of cell C18 using the NPV function (b) Should the machinery be purchased? $10,000 25,000 50,000 37,500 100,000 Present Value of Net Cash Flows

A company is considering a $150,000 investment in machinery with the following net cash flows. The company requires a 10 % return on its investments. Initial investment Required rate of return Required: (a) Compute the net present value of this investment. Period 1 5 Totals Initial investment Net present value $150,000 10% Net Cash Flows Verify the value of cell C18 using the NPV function (b) Should the machinery be purchased? $10,000 25,000 50,000 37,500 100,000 Present Value of Net Cash Flows

Essentials Of Investments
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
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2 A company is considering a $150,000 investment in machinery with the following net cash flows. The company requires a 10% return on its investments. 3 Initial investment 5 Required rate of return 5 0 1 2 3 4 S -6 17 18 24 Required: (a) Compute the net present value of this investment. Period 1 2 3 4 5 Totals Initial investment Net present value $150,000 10% 19 20 Verify the value of cell C18 using the NPV function 21 22 (b) Should the machinery be purchased? 3 Net Cash Flows $10,000 25,000 50,000 37,500 100,000 Present Value of Net Cash Flows +
Transcribed Image Text:2 A company is considering a $150,000 investment in machinery with the following net cash flows. The company requires a 10% return on its investments. 3 Initial investment 5 Required rate of return 5 0 1 2 3 4 S -6 17 18 24 Required: (a) Compute the net present value of this investment. Period 1 2 3 4 5 Totals Initial investment Net present value $150,000 10% 19 20 Verify the value of cell C18 using the NPV function 21 22 (b) Should the machinery be purchased? 3 Net Cash Flows $10,000 25,000 50,000 37,500 100,000 Present Value of Net Cash Flows +
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