(Ignore income taxes in this problem.) Your Company uses a discount rate of 10%. The company has an opportunity to buy a machine now for $38,000 that will yield cash inflows of $10,000 per year for each of the next five years. The machine would have no salvage value. The net present value of this machine to the nearest whole dollar is: If the NPV is negative, enter your number with a – in front. Otherwise, just enter the number.
(Ignore income taxes in this problem.) Your Company uses a discount rate of 10%. The company has an opportunity to buy a machine now for $38,000 that will yield cash inflows of $10,000 per year for each of the next five years. The machine would have no salvage value. The net present value of this machine to the nearest whole dollar is: If the NPV is negative, enter your number with a – in front. Otherwise, just enter the number.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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(Ignore income taxes in this problem.) Your Company uses a discount rate of 10%. The company has an opportunity to buy a machine now for $38,000 that will yield cash inflows of $10,000 per year for each of the next five years. The machine would have no salvage value. The net present value of this machine to the nearest whole dollar is:
If the NPV is negative, enter your number with a – in front. Otherwise, just enter the number.
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Step 1
Introduction:-
Present value (PV), also known as present discounted value, is the value of a projected income stream as of the valuation date. The present value of money is generally less than the future value because money has interest-earning potential, or the time value of money, unless interest rates are zero or negative, in which case the present value is equal to or greater than the future value. A basic method to convey temporal value is "a dollar now is worth more than a dollar tomorrow."
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