Hint: this is the sum of each future year's discounted cash flows. What is the present value of all future cash flows? Note: do not include value of Year 0 cash flow. Monster Beverage is considering purchasing a new canning machine. This machine costs $3,500,000 up front. Required return = 11.6% Year Cash Flow Discounted Cash Flow 0 $-3,500,000 $-3,500,000 1 $1,000,000 $896,057 2 $1,200,000 $963,503 3 $1,300,000 $935,300 4 $900,000 $580,211 5 $1,000,000 $577,669
Hint: this is the sum of each future year's discounted cash flows. What is the present value of all future cash flows? Note: do not include value of Year 0 cash flow. Monster Beverage is considering purchasing a new canning machine. This machine costs $3,500,000 up front. Required return = 11.6% Year Cash Flow Discounted Cash Flow 0 $-3,500,000 $-3,500,000 1 $1,000,000 $896,057 2 $1,200,000 $963,503 3 $1,300,000 $935,300 4 $900,000 $580,211 5 $1,000,000 $577,669
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
Related questions
Question
Hint: this is the sum of each future year's discounted cash flows. What is the present value of all future cash flows? Note: do not include value of Year 0 cash flow. Monster Beverage is considering purchasing a new canning machine.
This machine costs $3,500,000 up front.
Required return = 11.6%
Year
Cash Flow
Discounted Cash Flow
0
$-3,500,000
$-3,500,000
1
$1,000,000
$896,057
2
$1,200,000
$963,503
3
$1,300,000
$935,300
4
$900,000
$580,211
5
$1,000,000
$577,669
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education