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what is the NPV of this investment?

what is the NPV of this investment?

Essentials Of Investments
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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Can I get the answers to 10.2 and 10.3

### 10.2 Net Present Value **Scenario:** Kingston, Inc. is considering purchasing a new machine at a cost of $4,133,250. They expect this equipment to produce cash flows of $814,322, $863,275, $937,250, $1,017,112, $1,212,960, and $1,225,000 over the next six years. If the appropriate discount rate is 15 percent, what is the NPV of this investment? ### 10.3 Net Present Value **Scenario:** Crescent Industries management is planning to replace some existing machinery in its plant. The cost of the new equipment and the resulting cash flows are shown in the table below. If the firm uses an 18 percent discount rate for projects like this, should management go ahead with the project? | Year | Cash Flow | |------|--------------| | 0 | −$3,300,000 | | 1 | 875,123 | | 2 | 966,222 | | 3 | 1,145,000 | | 4 | 1,250,399 | | 5 | 1,504,445 | The table lists the initial negative cash flow for the new equipment in Year 0, followed by the expected positive cash flows for Years 1 through 5.
Transcribed Image Text:### 10.2 Net Present Value **Scenario:** Kingston, Inc. is considering purchasing a new machine at a cost of $4,133,250. They expect this equipment to produce cash flows of $814,322, $863,275, $937,250, $1,017,112, $1,212,960, and $1,225,000 over the next six years. If the appropriate discount rate is 15 percent, what is the NPV of this investment? ### 10.3 Net Present Value **Scenario:** Crescent Industries management is planning to replace some existing machinery in its plant. The cost of the new equipment and the resulting cash flows are shown in the table below. If the firm uses an 18 percent discount rate for projects like this, should management go ahead with the project? | Year | Cash Flow | |------|--------------| | 0 | −$3,300,000 | | 1 | 875,123 | | 2 | 966,222 | | 3 | 1,145,000 | | 4 | 1,250,399 | | 5 | 1,504,445 | The table lists the initial negative cash flow for the new equipment in Year 0, followed by the expected positive cash flows for Years 1 through 5.
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