Salsa Company is considering an investment in technology to improve its operations. The investment costs $243,000 and 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 Net cash Flow $ 47,700 52,500 75,900 3 4 5 Required: 95,800 125,800 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?
Salsa Company is considering an investment in technology to improve its operations. The investment costs $243,000 and 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 Net cash Flow $ 47,700 52,500 75,900 3 4 5 Required: 95,800 125,800 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?
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
Related questions
Question
Transcribed Image Text:Salsa Company is considering an investment in technology to improve its operations. The investment costs $243,000 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
52,500
75,900
95,800
125,800
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 payback period for this investment.
Note: Enter cash outflows with a minus sign. Round your Payback Period answer to 1 decimal place.
Cumulative Net Cash
Year
Net Cash Flows
Flows
Initial investment $
(243,000)
$
(243,000)
Year 1
47,700
Year 2
52,500
Year 3
75,900
Year 4
95,800
Year 5
125,800
Payback period =
Required 1
Required 2
>
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 1 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education