General Accounting question costs$350,000. YouA factory costsforecast that it will produce cashinflows of $75,000 in year 1, $135,000in year 2, and $210,000 in year 3. Thediscount rate is 11%.a) Calculate the Present Value ofcash inflows.b) Is the factory a good investment?Yes or No?

Step 1: Define Present Value (PV)Present Value (PV) is the value of future cash inflows discounted…

Answered: costs $350,000. You A factory costs…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 1PA: Your company is planning to purchase a new log splitter for is lawn and garden business. The new...

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costs $350,000. You A factory costs forecast that it will produce cash inflows of $75,000 in year 1, $135,000 in year 2, and $210,000 in year 3. The discount rate is 11%. a) Calculate the Present Value of cash inflows. b) Is the factory a good investment? Yes or No?