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Required: Two present value tables are provided: Present Value of a Single Amount and Present Value of an Annuity. Use them as directed in the problem requirements. 1. Prepare a schedule of cash flows for the proposed project. (Assume that there are no income taxes.) If an amount is negative or an outflow, first enter a minus sign (-). Schedule of Cash Flows Year 0 Equipment Working capital 1,100,000 130,000 Total 1,230,000 Years 1-7 Cost savings 350,000 Equipment operating costs 260,000 Total 90,000 Years 5 Overhaul 110,000 Year 7 Salvage value Recovery of working capital Total 96,000 130,000 226,000 2(a) Compute the NPV of the project. For discount factors, use the tables shown in Present Value Tables. Round the present value calculation and your final answer to the nearest whole dollar. If an amount is negative, first enter a minus sign (-). The NPV of the project is $ 281,020 X 2(b) Should the new process design be accepted? No ✔, the new process design should not be accepted.

Required: Two present value tables are provided: Present Value of a Single Amount and Present Value of an Annuity. Use them as directed in the problem requirements. 1. Prepare a schedule of cash flows for the proposed project. (Assume that there are no income taxes.) If an amount is negative or an outflow, first enter a minus sign (-). Schedule of Cash Flows Year 0 Equipment Working capital 1,100,000 130,000 Total 1,230,000 Years 1-7 Cost savings 350,000 Equipment operating costs 260,000 Total 90,000 Years 5 Overhaul 110,000 Year 7 Salvage value Recovery of working capital Total 96,000 130,000 226,000 2(a) Compute the NPV of the project. For discount factors, use the tables shown in Present Value Tables. Round the present value calculation and your final answer to the nearest whole dollar. If an amount is negative, first enter a minus sign (-). The NPV of the project is $ 281,020 X 2(b) Should the new process design be accepted? No ✔, the new process design should not be accepted.

FINANCIAL ACCOUNTING
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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Required: Two present value tables are provided: Present Value of a Single Amount and Present Value of an Annuity. Use them as directed in the problem requirements. 1. Prepare a schedule of cash flows for the proposed project. (Assume that there are no income taxes.) If an amount is negative or an outflow, first enter a minus sign (-). Schedule of Cash Flows Year 0 Equipment Working capital 1,100,000 130,000 Total 1,230,000 Years 1-7 Cost savings 350,000 Equipment operating costs 260,000 Total 90,000 Years 5 Overhaul 110,000 Year 7 Salvage value Recovery of working capital Total 96,000 130,000 226,000 2(a) Compute the NPV of the project. For discount factors, use the tables shown in Present Value Tables. Round the present value calculation and your final answer to the nearest whole dollar. If an amount is negative, first enter a minus sign (-). The NPV of the project is $ 281,020 X 2(b) Should the new process design be accepted? No ✔, the new process design should not be accepted.
Transcribed Image Text:Required: Two present value tables are provided: Present Value of a Single Amount and Present Value of an Annuity. Use them as directed in the problem requirements. 1. Prepare a schedule of cash flows for the proposed project. (Assume that there are no income taxes.) If an amount is negative or an outflow, first enter a minus sign (-). Schedule of Cash Flows Year 0 Equipment Working capital 1,100,000 130,000 Total 1,230,000 Years 1-7 Cost savings 350,000 Equipment operating costs 260,000 Total 90,000 Years 5 Overhaul 110,000 Year 7 Salvage value Recovery of working capital Total 96,000 130,000 226,000 2(a) Compute the NPV of the project. For discount factors, use the tables shown in Present Value Tables. Round the present value calculation and your final answer to the nearest whole dollar. If an amount is negative, first enter a minus sign (-). The NPV of the project is $ 281,020 X 2(b) Should the new process design be accepted? No ✔, the new process design should not be accepted.
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