Salsa Company is considering an investment in technology to improve its operations. The investment costs $250,000 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 2345 Net cash Flow $ 47,700 54,000 76,400 94,400 126,700 Required: 1. Determine the payback period for this investment. 2. Determine the break-even time for this investment. 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 Required 4 Determine the net present value for this investment. Net present value Required 2 Required 4 >

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Salsa Company is considering an investment in technology to improve its operations.
The investment costs $250,000 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
12345
1
3
5
Net cash
Flow
$ 47,700
54,000
76,400
94,400
126,700
Required:
1. Determine the payback period for this investment.
2. Determine the break-even time for this investment.
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
Required 4
Determine the net present value for this investment.
Net present value
< Required 2
Required 4 >
Transcribed Image Text:Salsa Company is considering an investment in technology to improve its operations. The investment costs $250,000 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 12345 1 3 5 Net cash Flow $ 47,700 54,000 76,400 94,400 126,700 Required: 1. Determine the payback period for this investment. 2. Determine the break-even time for this investment. 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 Required 4 Determine the net present value for this investment. Net present value < Required 2 Required 4 >
Salsa Company is considering an investment in technology to improve its operations.
The investment costs $250,000 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
Net cash
Flow
$ 47,700
54,000
76,400
94,400
126,700
Required:
1. Determine the payback period for this investment.
2. Determine the break-even time for this investment.
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
Year
Determine the break-even time for this investment.
Note: Enter cash outflows with a minus sign. Round your break-even time answer to 1 decim
Initial investment
Year 1
Year 2
Year 3
Year 4
Year 5
Break-even time=
Required 3
Net Cash Flows
(250,000)
$
Required 4
Present Value
of 1 at 9%
years
< Required 1
Present Value of
Net Cash Flows
per Year
Cumulative
Present Value of
Net Cash Flows
Required 3 >
Transcribed Image Text:Salsa Company is considering an investment in technology to improve its operations. The investment costs $250,000 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 Net cash Flow $ 47,700 54,000 76,400 94,400 126,700 Required: 1. Determine the payback period for this investment. 2. Determine the break-even time for this investment. 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 Year Determine the break-even time for this investment. Note: Enter cash outflows with a minus sign. Round your break-even time answer to 1 decim Initial investment Year 1 Year 2 Year 3 Year 4 Year 5 Break-even time= Required 3 Net Cash Flows (250,000) $ Required 4 Present Value of 1 at 9% years < Required 1 Present Value of Net Cash Flows per Year Cumulative Present Value of Net Cash Flows Required 3 >
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