Magno - pro is considering buying a new water treatment system for its plant in Austin, Texas. The investment proposal passed the initial screening tests(payback and accounting rate of return) so the company now wants to analyze the proposal using the discounted cash flow methods. The water treatment systemcosts $52,800, has a eight-year life, and has no residual value. The estimated net cash inflows from environmental cleanup savings are $11,000 per year over itslife. The company's required rate of return is 16%.E (Click the icon to view Present Value of $1 table.)(Click the icon to view Present Value of Ordinary Annuity of $1 table.)Read the requirements.Requirement 1. Compute the water treatment system's NPV. (Enter any factor amounts to three decimal places, X.XXX. Use parentheses or a minus sign for anegative NPV.)Annuity PV Factor(i=16%, n=8)Net CashYearsInflowPresent ValueYears 1-8Present value of annuityYear 0InvestmentNet present valueRequirements- X1. Compute the water treatment system's NPV.2. Find the water treatment system's IRR (exact percentage is not required).3. Should Magno - pro buy the water treatment system? Why or why not?PrintDone |tests (payback and accounting raX Jover its life. The company's requ- XReferenceReferencePresent Value of $1Present Value of Ordinary Annuity of $116%0 862PeriodsPeriod 1Period 2Period 3Period 4Period 51%2%3%4%5%6%7%8%9%10%12%14%15%18%20%us sign for a negative NPV.)PeriodsPeriod 1Period 2Period 3Period 4Period 51%2%3%4%5%6%7%8%18%0 862 0.8470.842 0.826 0.797 | 0.769 0.756 0.743 0.7189%10%12%14%15%16%20%0.990 | 0.9801.970| 1.9422.941| 2.8843.902 3.8084.853 4.713 4.5800.917 0.909 0.893 0.8770.9710.9620.952 0.943 0.935 0.926 0.917 0.909 0.8930.8770.8700.8470.8330.990 0.980 0.9710,980| 0.961 | 0,9430.971 0.942 0.915 0.889 0.8640.961 0.924 0.888 0.855 0.8230.951 0.906 0.863 0.822 0.7840.962 0.9520.925 0.9070.943 0.9350.890 | 0.8730.840 0.8160.792 0.7630.747 0.713 0.6810.8330.6940.9260.8701.886 1.859 1.833 1.808 1.783 1.759 1.736 1.6902.775 2.723 2.673 2.624 2577 2,531| 2.4873.546 3.465 3.387 3.312 3.240 3.1704.329 4.212 4.100 3.993 3.890 3.7911.9131.6471.6261.6051.5661.5280.8572402 | 2,3222.283 2.2462.855 2.7983.352 3.274 3.127 2.9912.174 2.1062.690 2.5890.794 0.772 0.751 0.7122.8290,5790.572 0.552 0.516 0.4820.476 0.437 0.4020.675 0.658 0.641 0.6093.7173.6303.0373.605 3.4332.9140.708 0.683 0.636 | 0.5920.650 0.621 0.567 0.519 0.4970.7354.452Period 6Period 7Period 8Period 9Period 105.795| 5.601 5.417 5.242 5.076 4.917 4.767 4.623 4.486 4.3556.728 6.472 6.230 | 6.002 | 5.786 5.582 5.389 5.206 5.033 4.868 4.564 4.2887.652 7.325 7.0208.566 8.162 7.7869.471| 8.983 8.5304.111 3.889 3.784 3.685 | 3.498 3.3260.942 0.888 0.837 0.790 0.746 0.7050.933 0.871 0.813 0.760 | 0.711Period 6Period 7Period 8Period 9Period 10 0.905 0.820 0.744 0.676 0.6140.456 0.432 0.410 0.370 0.3350.665 0.623 0.583 0.547 0.513 0.452 0.400 0.376 0.354 0.314 0.2790.923 0.853 0.789 0.731 0.677 0.627 0.582 0.540 0.502 0.467 0.404 | 0.351 0.327 0.305 0.266 0.2330.308 0.284 0.263 0.225 0.1940.508 | 0.463 0.422 0.386 0.322 0.270 0.247 0.227 0.191 0.1620.6660.630 0.596| 0.564| 0.5074.1604.039 3.812 3.6056.733 6.463 6.210 5.971 5.747 5.535 5.335 4.968 4.6397.435 7.108 6.802 6.515 6.247 5.995 5.759 5.328 4.9464.4874.344 4.078 3.8374.607| 4.303 4.0314.494 4.1924.7720.914 0.837 0.766 0.703 0.645 0.592 0.544 0.500 0.460 0.424 0.3610.5588.1117.722 7.360 7.024 6.710 6.418 6.145 5.650 | 5.216| 5.0194.8338.760 8.306 7.887 7.499 7.139 6.805 6.495 5.938 5.453 5.234Period 11Period 12Period 13Period 14Period 1510.368 9.78711.255 10.575 9.954 9.385 8.863 8.384 7.943 7.536 7.161 6.814 6.19412.134 11.348 10.635 9.986 9.394 8.853 8.358 7.904 7.487 7.103 6.424 5.842 5.58313.004 12.106 11.296 10.563 9.899 9.295 8.745 8.244 7.786 7.36713.865 12.849 11.938 11.118 10.380 9.712 9.108 8.559 8.061 7.606 6.811 6.1429.2535.0294.6564.327Period 11 0.896 0.804 0.722 0.650 0.585 0.527Period 12 0.887 0.788 0.701 0.625 0.557 0.497Period 13 0.879 0.773 0.681 0.601 0.530 | 0.469Period 14 0.870 0.758 0,661 0,577 0,505 0.442 | 0.388Period 15 0.861 0.743 0.642 0.555 0.4810.429 0.388 0.350 0.2870.397 0.356 0.319 0.257 0.208 0.187 0.168 0.137 0.1120.368 0.326 0.290 0.229 0.182 0.1630.3400.315 0.275 0.239 0.183 0.140 0.123 0.108 0.084 0.0650.292 |0.252 | 0.218 | 0.163 | 0.123 0.107 | 0.093 0.071 0.0540.270 0.2310.198 0.1460.2500.2320.215 0.178 0.149 0.104 0.073 0.061 0.051 0.037 0.0260.4750.237 0.215 0.195 0.162 0.1355.660 5.421 5.1974.7934 4390.4445.3424.9104.5330.145 0.116 0.0930.299 0.263 0.205 0.160 0.141 0.125 0.099 0.0780.4156.6286.002 5.7245.4685.0084.6110.417 0.3625.847 5.5755.092 4.675Period 16Period 17Period 18Period 19Period 2014.718 13.578 12.561 11.652 10.838 10.106 9.447 8.851 8.313 7.824 6.974 6.26515.562 14.292 13.166 12.166 11.274 10.477 9.763 9.122 8.544 8.022 7.120 6.373 6.047 5.749 5.222 4.77516.398 14.992 13.754 12.659 11.690 10.828 10.059 9.372 8.756 8.201 7.250 6.467 6.12817.226 15.678 14.324 13.134 12.085 11.158 10.336 9.604 8.950 8.365 7.366 6.550 6.19818.046 16.351 14.877 13.590 12.462 11.470 10.594 9.818 9.129 8.514 7.469 6.623 6.2595.9545.669 5.162 4.730Period 16 0.853 0.728 0.623 0.534 0.458Period 17 0.844 0.714 0.605 0.513 0.436 0.371 | 0.317Period 18 0.836 0.700 0.587 0.494 0.416 0.350 | 0.296Period 19 0.828 0.686 0.570 0.475 0.396 0.331 0.277Period 20 0.820 0.673 0.554 0.456 0.377 0.312 0.2580.394 0.3390.108 0.093 0.080 0.060 0.0450.212 0.180 0.130 0.095 0.081 0.069 | 0.051 0.0380.083 0.070 0.060 0.043 0.0315.818 5.273 4.8125.316 4,8445.353 4.8705.8770.194 0.164 0.1165.929Period 21Period 22Period 23Period 24 21.243 18.914 16.936 15.247 13.799 12.550 11.469 10.529 9.707 8.985 7.784Period 25 22.023 19.523 17.413 15.622 14.094 12.783 11.654 10.675 9.823 9.077 7.843 6.87318.857 17.011 15.415 14.029 12.821 11.764 10.836 10.017 9.292 8.649 7.562 6.68719.660 17.658 15.937 14.451 13.163 12.042 11.061 10.201 9.442 8.772 7.645 6.74320.456 18.292 16.444 14.857 13.489 12.303 11.272 10.371 9.580 8.883 7.718 6.792 6.3996.312 5.973 5.384 4.891Period 21 0.811 0.660 0.538 0.439 0.359 0.294 0.242Period 22 0.803 0.647 0.522 0.422 0.342 0.278 0.226Period 23 0.795 0.634 0.507Period 24 0.788 0.622 0.492 0.390 0.310Period 25 0.780 0.610 0.478 0.375 0.295 0.233 | 0.1840.199 0.164 0.135 0.093 0.064 0.053 0.044 0.0310.184 0.150 0.123 0.083 0.056 0.046 0.038 0.026 0.0180.170 0.138 0.112 | 0.0740.158 0.126 0.102 0.066 0.043 0.035 0.028 0.019 0.0130.146 0.116 0.092 0.0590.0226.359 6.0115.4104.9090.406 | 0.3260.049 0.040 0.033 0.022 0.0156.0445.432 4.9250.262 0.2110.247 0.1976.8356.4346.0735.4514.9370.038 0.030 | 0.024 0.016 | 0.0106.4646.0975.4674.948Period 26 22.795 20.121 17.877 15.983 14.375 13.003 11.826 10.810 9.929 9.161Period 27 23.560 20.707 18.327 16.330 14.643 13.211 11.987 10.935 10.027 9.237 7.943 6.935Period 28 24.316 21.281 18.764 16.663 14.898 13.406 12.137 11.051 10.116 9.307| 7.984 6.961Period 29 25.066 21.844 19.188 16.984 15.141 13.591 12.278 11.158 10.198 9.370 8.022 6.983Period 307.896 6.906 | 6.4916.1185.480 4.956Period 26 0.772 0.598 0.464 0.361 0.281 0.220| 0.172Period 27 0.764 0.586 0.450 0.347 0.268 0.207 0.161Period 28 0.757 0.574 0.437 0.333 0.255 0.196 0.150Period 29 0.749 0.563 0.424 0.321 0.243 0.185 0.141Period 30 0.742 0.552 0.412 0.308 0.2310.135 0.106| 0.084 | 0.0530.125 0.0980.116 0.090 0.069 0.042 0.026 0.020 0.016 0.010 0.0060.107 0.082 0.063 0.037 0.022 0.017 0.014 0.008 0.0050.099 0.075 0.057 0.033 0.020 0.015 | 0.012 0.0070.033 0.026 0.021 0.014 0.0090.076 0.047 | 0.029 0.023 0.018 0.011 0.0075.492 4.9646.152 5.502 4.9705.510 4.9755.517 4.9796.5146.1366.5346.5516.1660.174 0.13125.808 22.396 19.600 17.292 15.372 13.765 12.409 11.258 10.274 9.4278.055 7.0036.5666.1770.004Period 40 0.672 0.453 0.307 0.208 0.142 0.097 0.0670.046 0.032 0.022 | 0.0110.005 0.004 | 0.003 0.001 0.001Period 4032.835 27.355 23.115 19.793 17.159 15.046 13.332 11.925 10.757 9.779 8.244 7.1056.6426.2335.548 4.997Period 50 0.608 0.372 0.228 0.141 | 0.087 0.054| 0.0340.0210.013 0.009 0.003 | 0.0010.001 | 0.001Period 5039.196 31.424 25.730 21.482 18.256 15.762 13.801 12.233 10.962 9.915 8.3047.1336.661 6.2465.554 4.999EPrintDonePrintDoneClear All2:16 AMP Type here to searchWA O E 4) 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Net present value means the difference between present value of cash inflow and present value of…

Magno - pro is considering buying a new water treatment system for its plant in Austin, Texas. The investment proposal passed the initial screening tests (payback and accounting rate of return) so the company now wants to analyze the proposal using the discounted cash flow methods. The water treatment system costs $52,800, has a eight-year life, and has no residual value. The estimated net cash inflows from environmental cleanup savings are $11,000 per year over its life. The company's required rate of return is 16%. (Click the icon to view Present Value of $1 table.) (Click the icon to view Present Value of Ordinary Annuity of $1 table.) Read the requirements. Requirement 1. Compute the water treatment system's NPV. (Enter any factor amounts to three decimal places, XXXX. Use parentheses or a minus sign for a negative NPV.) Net Cash Inflow Annuity PV Factor (i=16%, n=8) Present Value Years Years 1-8 Present value of annuity Year 0 Investment Net present value

Magno - pro is considering buying a new water treatment system for its plant in Austin, Texas. The investment proposal passed the initial screening tests (payback and accounting rate of return) so the company now wants to analyze the proposal using the discounted cash flow methods. The water treatment system costs $52,800, has a eight-year life, and has no residual value. The estimated net cash inflows from environmental cleanup savings are $11,000 per year over its life. The company's required rate of return is 16%. (Click the icon to view Present Value of $1 table.) (Click the icon to view Present Value of Ordinary Annuity of $1 table.) Read the requirements. Requirement 1. Compute the water treatment system's NPV. (Enter any factor amounts to three decimal places, XXXX. Use parentheses or a minus sign for a negative NPV.) Net Cash Inflow Annuity PV Factor (i=16%, n=8) Present Value Years Years 1-8 Present value of annuity Year 0 Investment Net present value

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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