Herky Foods is considering acquisition of a new wrapping machine. The initial in

Question

Herky Foods is considering acquisition of a new wrapping machine. The initial investment is estimated at $1.47 million, and the machine will have a 5-year life with no salvage value. Using a ort rate of 8% doto mothe net present value (NP make this investment? ofthe machi eg ven its expected operatrg cash inb ws showninthe follo ving table Based on the proyers NP . should Herk, he net prsent valun ing maschine in Round to the nearost ont)Data Table Based on the project's NPV,should Horky make this investment? (Select the bost answer below) (Click on the loon located on the top-right comer of the data table below in ordor to copy its contents into a spreadshoet) O Yes Year Cash inflow $470,400 $441,000 $352,800 411,600 235 200

Explanation / Answer

NPV = 86,317.45

Yes

Discount rate 8.0000% Cash flows Year Discounted CF= cash flows/(1+rate)^year Cumulative cash flow      (1,470,000.000) 0                     (1,470,000.00)                 (1,470,000.00)            470,400.000 1                           435,555.56                 (1,034,444.44)            441,000.000 2                           378,086.42                   (656,358.025)            352,800.000 3                           280,064.01                     (376,294.01)            411,600.000 4                           302,538.29                       (73,755.72)            235,200.000 5                           160,073.17                          86,317.45

Related Questions

Navigate

• Browse (All)
• Browse H
• Subjects

---