In planning the establishment of MOCAF flour mill facilities there are several alternativesas follows: (x Rp million,-)Alternative IAlternative IlAlternative IIIInitial investment4.0006 200Annual net receipts8001260Final score0400Economic age10 years.10 yearsIf the MARR is 12% per year, look for the best alternative with the method:a.Net Present Valueb.IRR7 6001 50060010 years

Net present value (NPV) of an alternative/project refers to the variance between the initial…

Answered: If the MARR is 12% per year, look for…

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If the MARR is 12% per year, look for the best alternative with the method: a. Net Present Value b. IRR

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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Present Value =PV Please see image
The management of Kunkel Company is considering the purchase of a $21,000 machine that would reduce operating costs by $5,000 per year. At the end of the machine’s five-year useful life, it will have zero salvage value. The company’s required rate of return is 12%. Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using table. Required: 1. Determine the net present value of the investment in the machine. 2. What is the difference between the total, undiscounted cash inflows and cash outflows over the entire life of the machine?
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