Salsa Company is considering an investment in technology to improve its operations. The investment costs $241,000 and will yield following net cash flows. Management requires a 9% return on investments. (PV of $1. FV of $1. PVA of $1, and FVA of $1) Note: Use appropriate factor(s) from the tables provided. Year 12345 2 3 4 5 Required: Net cash Flow $ 47,900 52,500 75,400 94,100 126,100
Salsa Company is considering an investment in technology to improve its operations. The investment costs $241,000 and will yield following net cash flows. Management requires a 9% return on investments. (PV of $1. FV of $1. PVA of $1, and FVA of $1) Note: Use appropriate factor(s) from the tables provided. Year 12345 2 3 4 5 Required: Net cash Flow $ 47,900 52,500 75,400 94,100 126,100
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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Transcribed Image Text:Salsa Company is considering an investment in technology to improve its operations. The investment costs $241,000 and will yield the
following net cash flows. Management requires a 9% return on investments. (PV of $1. FV of $1. PVA of $1, and FVA of $1)
Note: Use appropriate factor(s) from the tables provided.
Year
1
2
3
4
5
Required:
1. Determine the payback period for this investment.
2. Determine the break-even time for this investment.
Net cash
Flow
$ 47,900
52,500
75,400
94,100
126,100
3. Determine the net present value for this investment.
4. Should management invest in this project based on net present value?
Complete this question by entering your answers in the tabs below.
Required 1 Required 2 Required 3
Year
Determine the payback period for this investment.
Note: Enter cash outflows with a minus sign. Round your Payback Period answer to 1 decimal place.
Initial investment
Year 1
Year 2
Year 3
Year 4
Year 5
Payback period=
Net Cash Flows
$
Required 4
(241,000)
47,900
52,500
75,400
94,100
126,100
Cumulative Net Cash
Flows
Required 1
Required 2 >
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