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Home Q & A Board Other Fields Homework Help Business Economics
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dxpayne dxpayne
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Posts: 930
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6 years ago
What is the net present value (rounded to the nearest thousand) of the investment assuming the required rate of return is 10 percent? Would Hawkeye Cleaners want to purchase the new machine?
A) $112,000; yes
B) $52,000; yes
C) $(52,000); no
D) $(67,000); no
E) $127,000; yes
Textbook 
Cost Accounting: A Managerial Emphasis, Canadian Edition

Cost Accounting: A Managerial Emphasis, Canadian Edition


Edition: 7th
Authors:
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wrote...
#1
6 years ago
A
Explanation:  A) CF 0 = -$200,000 + $30,000 - $60,000 = -$230,000
CF 1 = $50,000; PV = $45,454.55
CF 2 = $150,000; PV = $123,966.94
CF 3 = $150,000 + $20,000 + $60,000 = $230,000; PV = $172,802

NPV = -$230,000 + $342,224 = $112,224
Without mathematics, there's nothing you can do. Everything around you is mathematics. Everything around you is numbers.
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