Following is information on an investment in a manufacturing machine. The machine has zero salvage value. The company requires a 6% return from its investments.
Following is information on an investment in a manufacturing machine. The machine has zero salvage value. The company requires a 6% return from its 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
Problem 1PS
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Required information
[The following information applies to the questions
displayed below.]
Following is information on an investment in a
manufacturing machine. The machine has zero salvage
value. The company requires a 6% return from its
investments.
Initial investment
$ (210,000)
Net cash flows:
Year 1
140,000
Year 2
132,000
Year 3
113,000
Compute this machine's net present value. (PV of $1, FV of $1, PVA of
$1, and FVA of $1) (Use appropriate factor(s) from the tables provided
Round all present value factors to 4 decimal places. Round present
value amounts to the nearest dollar.)
Net Cash Flow
Present Value
Factor
Present Value of Ne
Cash Flows
Year 1
$
140,000
Year 2
132,000
Year 3
113,000
Totals
$
385,000
Initial investment
Net present value](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Ff4f6f42a-fa8b-4fab-b0ef-0bdbea8ab6ca%2Fd0477f77-040c-427e-99e6-4c86d70f8fcc%2F7mdfvw_processed.jpeg&w=3840&q=75)
Transcribed Image Text:--
!
Required information
[The following information applies to the questions
displayed below.]
Following is information on an investment in a
manufacturing machine. The machine has zero salvage
value. The company requires a 6% return from its
investments.
Initial investment
$ (210,000)
Net cash flows:
Year 1
140,000
Year 2
132,000
Year 3
113,000
Compute this machine's net present value. (PV of $1, FV of $1, PVA of
$1, and FVA of $1) (Use appropriate factor(s) from the tables provided
Round all present value factors to 4 decimal places. Round present
value amounts to the nearest dollar.)
Net Cash Flow
Present Value
Factor
Present Value of Ne
Cash Flows
Year 1
$
140,000
Year 2
132,000
Year 3
113,000
Totals
$
385,000
Initial investment
Net present value
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