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Blue Run Snowboards makes snowboards. The company wants to add a new machine that would cost $80,000 and have a useful life of 5 years and no residual value. The company expects the machine will generate $24,000 annual cash inflows for 5 years. The discount rate is 10%. What is the net present value of the investment? Present Value of $1 Periods    10%    12% 1    0.909    0.893 2    0.826    0.797 3    0.751    0.712 4    0.683    0.636 5    0.621    0.567   Present Value of Annuity of $1 Periods    10%    12% 1    0.909    0.893 2    1.736    1.690 3    2.487    2.402 4    3.170    3.037 5    3.791    3.605 ⦁    $10,984 ⦁    $  6,520 ⦁    $14,904 ⦁    $13,608

Blue Run Snowboards makes snowboards. The company wants to add a new machine that would cost $80,000 and have a useful life of 5 years and no residual value. The company expects the machine will generate $24,000 annual cash inflows for 5 years. The discount rate is 10%. What is the net present value of the investment? Present Value of $1 Periods    10%    12% 1    0.909    0.893 2    0.826    0.797 3    0.751    0.712 4    0.683    0.636 5    0.621    0.567   Present Value of Annuity of $1 Periods    10%    12% 1    0.909    0.893 2    1.736    1.690 3    2.487    2.402 4    3.170    3.037 5    3.791    3.605 ⦁    $10,984 ⦁    $  6,520 ⦁    $14,904 ⦁    $13,608

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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20. Blue Run Snowboards makes snowboards. The company wants to add a new machine that would cost $80,000 and have a useful life of 5 years and no residual value. The company expects the machine will generate $24,000 annual cash inflows for 5 years. The discount rate is 10%. What is the net present value of the investment?

Present Value of $1

Periods    10%    12%
1    0.909    0.893
2    0.826    0.797
3    0.751    0.712
4    0.683    0.636
5    0.621    0.567

 
Present Value of Annuity of $1

Periods    10%    12%
1    0.909    0.893
2    1.736    1.690
3    2.487    2.402
4    3.170    3.037
5    3.791    3.605

⦁    $10,984
⦁    $  6,520
⦁    $14,904
⦁    $13,608

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