What is the net present value ? And should the van be purchased? unit VIII Question 15 part a 428Susan's Pet Shop Is consldering the purchase ofa new dellveryvan. Susan Smlth,owner of the shop, has complled the followIngestimates In trylng to determinewhether the dellveryvan should be purchased.Cost of the van$44,500Annual net cash flows009Estimated useful life8yearsCost of capltalPresent value of an annulty of1Present value of 1.Susan's assistant manager Is trylng to convince Susan that the van has other benefts that she hasn't consldered In the InItlalestimates. These addltlonal benefits, Including the free advertlslng the store's name palnted on the van's doors will provlde, areexpected to Increase net cash flows by $510 eachyear.TABLE 3 Present Valu of 1(1)Periods11%869571.2.95238907038638400606826450600692456.54168000686575271178854806587356743497185.710680.6227548167.to651690.S00250.5439年3855435218649585846852679.428838753A5049256680929rసగరరా468840.41496,36770.3261457748315241827015.2176316.436301528218.Milz'.23171180802145511911"10367456393768920.TABLE 4 Present Value of an Annulty of IPayments0.934581.30802 176326 1.75911 173554 171252 1690o5 162571242432 2.577102.53130 2486852 44371240183 2.2832360606రం9 1272325 2678015.97130 .746455348e.5.334935.14612406714 448729.34507A M252.34AR4 7.942e7530 7.16074IA69 4926619437 5.4202,12.10.56312,12.6593011895910s276010.059099.3718g 3.75543 8.201417.7oie27.249676.12797సూందవాళి?券

Net present value NPV is the method of capital budgeting which calculates the present worth of net…

Answered: What is the net present value ? And…

Business

Accounting

What is the net present value ? And should the van be purchased? unit VIII Question 15 part a

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: What about time flows and cash Value money?

A: The time value of money refers to a sum of money that is worth more now than the same sum of money…

Q: - The cost of an intangible asset includes all acquisition costs plus expenditures to make it ready…

A: The initial cost of intangible assets factors into account all of the costs associated with its…

Q: Why is consignment not a sale?

A: The companies derived revenue by selling goods or delivering services. The companies main objective…

Q: etween: i. A Primary Market and Secondar

A: Primary Market The process through which a market becomes a source of securities is referred to as a…

Q: How to find present value annuity

A: Present value: It is the present value of the sum of money that a firm is going to receive at some…

Q: Which of these is not part of the historical cost of an asset? O training costs sales tax on…

A: Historical cost in accounting encompasses the original cost incurred to acquire an asset, which…

Q: how much is the goodwill?

A: Goodwill is defined as the difference between the purchase price and the fair value of the defined…

Q: Explain the concept of time value of money. Differentiate between present value and future value.…

A: 1) The time value of money is a financial concept that holds that money in the present is worth more…

Q: Hello I'm taking an a investment class and I need information on this question: What is compound…

A: Simple Interest and compound interest are two methods of calculating interest that is paid on an…

Q: What is the relationship between future exchange and clearinghouse?

A: Future exchange and clearing house are two different parts of future markets.

Q: Give a conclusion about time value of money and its applications

A: Below is the conclusion about the time value of money:

Q: How can standard deviation, a statistical measure of dispersion, be used in investment analysis

A: Standard Deviation: Standard deviation measures the scattering of a data set relevant to its mean.…

Q: What is goodwill? What is a bargain purchase?

Q: time-value of money

A: Time value of money is a concept based on the premise that the money available now is worth more…

Q: information access

A: With emerging product technology such as CD-I, DV-I, and so forth, and the possibility of charging…

Q: Which of the following has the right to sell an asset at a predetermined price?

A: A put option is an instrument which provides its holder an option to sell an underlying asset on a…

Q: Which of the following is not included as part of the cost of an item of property, plant and…

A: Property, Plant and Equipment refers to All fixed Asset having long useful life more than One year.…

Q: Which one of the following is an example of conventional form of investment?

A: Conventional investment categories includes trading investment options.

Q: QN 4 . If a product is making a loss should it be discountined (stop) explain your answers

A: Discontinuing a product that is making a loss should be done carefully and thoughtfully. It is…

Q: The potential percent gain or loss in changes of variable is taken into account by: A present worth…

A: Percent increase or decrease is such a measure of of change of percent which to extent measures…

Q: What is the concept of future value within the context of the larger overall concept of the time…

A: The concept of future value is a fundamental component of the broader idea known as the time value…

Q: None

A: BOP (Balance of Payment) - The balance of payments (BOP) is the method countries use to monitor all…

Q: Question. What are Operating and non-operating expence?

A: Expenses refer to the outflow of money for the payment of any product or service used in the course…

Q: Problem 5.e: what is the internal rate of return (IRR) of project D? (Do not add the % sign to your…

A: IRR of a project is the discount rate which makes net present value of the project equals to zero.…

Q: What are the three types of investment flows associated with buying apiece of equipment?

A: Investing Activities: It denotes to the actions carried out by a corporation for attainment of…

Q: Is goodwill a long-lived asset?

A: Goodwill is known as asset that includes company image. It is an intangible assets which do not…

Q: When is Leasing used?

A: Fixed assets are those type of assets which are being held by the business for longer period of…

Q: When performing time value of money computations with an EXCEL program, both Present value and…

A: The concept of the time value of money explains that the possessed has more worth in comparison to…

Q: O IAS 40 INVESTMENT PROPERTY SHOULD BE TAKEN UP IN SOPL OR OCI

A: Step 1 As per the provisions of IAS 40, investment property is means land or building or both which…

Q: What does HPR stand for? O a. Holding Period Return O b. House Price Return O C. Holding Power…

A: Abbreviation is a shorter form of words or phrase. The shorter form of word is used instead of whole…

Q: Spot market Futures market Over the counter market Forwards markets

A: Commodity market are very important for determining the prices of commodities.

Q: 69 Development expenditures Group of answer choices Are always capitalized as intangible asset Are…

A: solution introduction as per the relevant accounting standard related to intangible asset research…

Q: 12.2 What are three depreciable costs that are included in an asset's basis?

A: Every fixed asset loses its value over the period of time. Depreciation is recorded in order to…

Q: what if iternal rate of return is equal cost of capital ?what is decision

A: IRR or internal rate of return is the % return that the project generates. IRR is the rate at which…

Q: Question 9 Larceny is the trespassory taking of personal property with the intent to steal it. O…

A: Larceny is a legal term that refers to the unlawful taking of someone else's personal property with…

Q: What do we call the process of finding future value? Discounting Compounding Discount interest…

A: This is based on the concept of time value of money. Amount put aside today or invested today…

Q: ate consum

A: Introduction : A rational consumer spends its income in three ways - Consumption, savings and…

Q: What is time value of money

A: Time value of money is the concept that the value of a dollar to be received in future is less than…

Question

What is the net present value ? And should the van be purchased?

unit VIII Question 15 part a

428
Susan's Pet Shop Is consldering the purchase ofa new dellveryvan. Susan Smlth,owner of the shop, has complled the followIng
estimates In trylng to determinewhether the dellveryvan should be purchased.
Cost of the van
$44,500
Annual net cash flows
009
Estimated useful life
8years
Cost of capltal
Present value of an annulty of1
Present value of 1.
Susan's assistant manager Is trylng to convince Susan that the van has other benefts that she hasn't consldered In the InItlal
estimates. These addltlonal benefits, Including the free advertlslng the store's name palnted on the van's doors will provlde, are
expected to Increase net cash flows by $510 eachyear.
TABLE 3 Present Valu of 1
(1)
Periods
11%
86957
1.
2.
95238
90703
86384
00606
82645
06006
92456
.54168
00068
65752
71178
85480
65873
56743
49718
5.
71068
0.62275
4816
7.
to651
690
.S0025
0.5439年
38554
35218
64958
58468
52679
.4288
38753
A5049
25668
0929
rసగరరా
46884
0.41496
,36770
.32614
57748
31524
18270
15.
21763
16.
43630
15282
18.
Milz'
.23171
18080
21455
11911"
10367
45639
37689
20.
TABLE 4 Present Value of an Annulty of I
Payments
0.93458
1.30802 176326 1.75911 173554 171252 1690o5 162571
242432 2.577102.53130 2486852 44371240183 2.28323
60606
రం9 1
272325 267801
5.97130 .746455348e.5.334935.14612406714 44872
9.34507A M252.34AR4 7.942e7530 7.16074IA69 4926619437 5.4202,
12.
10.56312,
12.6593011895910s276010.059099.3718g 3.75543 8.201417.7oie27.249676.12797
సూందవాళి?
券

Definition Definition Calculation used to evaluate the investment and financing decisions that involve cash flows occurring over multiple periods. NPV is calculated as the difference between the present value of cash inflow and cash outflow. NPV is used for capital budgeting and investment planning as well as to compare similar investment alternatives.

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!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Explain Property Type Swap?
What is the role of depreciation allowance?
What do we call the process of finding present value? discounting compounding discount interest compound interest time value of money
What is Transfer Pricing? What are the approaches in determining transfer prices? In your own idea, identify some best practices in transfer pricing.
26
b. Which method should be selected using net present value analysis? O Method 1 O Method 2 ONeither of these
12.3 What is the difference between book value and market value?
fast What are the main principles of valuation?
Which is more important, saving or investing? Justify your answer
1. Why is it important to save for retirement?
9 A _____currency is one whose value is set primarily by market forces of supply and demand A. Pegged B. Floating c. Managed D. Depreciated
What's the best ETF to buy? And why?