Cleveland Cove Enterprises is evaluating the purchase of an elaborate hydraulic lift system for all of...
Cleveland Cove Enterprises is evaluating the purchase of an elaborate hydraulic lift system for all of its locations to use for the boats brought in for repair. The company has narrowed their choices down to two: the B14 Model and the F54 Model. Financial data about the two choices follows. (For the B14 Model, the present value for this scenario is
0.351
and the present value of annuity for this scenario is
4.639
The present value for this scenario is
0.404
and the present value of annuity for this scenario is
4.968
|
B14 Model |
F54 Model |
||
|
Investment |
$310,000 |
$230,000 |
|
|
Useful life (years) |
8 |
8 |
|
|
Estimated annual net cash inflows for useful life |
$70,000 |
$38,000 |
|
|
Residual value |
$20,000 |
$18,000 |
|
|
Depreciation method |
Straight−line |
Straight−line |
|
|
Required rate of return |
14% |
12% |
What is the net present value of the B14 Model?
Homework Answers
| Estimated annual net cash inflows | 70000 |
| X Present value of annuity | 4.639 |
| Present value of Estimated annual net cash inflows | 324730 |
| Residual value | 20000 |
| X Present value factor | 0.351 |
| Present value of Residual value | 7020 |
| Present value of Estimated annual net cash inflows | 324730 |
| Add: Present value of Residual value | 7020 |
| Total present value | 331750 |
| Less: Investment cost | -310000 |
| Net present value of the B14 Model | 21750 |
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Cleveland Cove Enterprises is evaluating the purchase of an
elaborate hydraulic lift system for all of...
Cleveland Cove Enterprises is evaluating the purchase of an elaborate hydraulic lift system for all of...
Cleveland Cove Enterprises is evaluating the purchase of an elaborate hydraulic lift system for all of its locations to use for the boats brought in for repair. The company has narrowed their choices down to two: the B14 Model and the F54 Model. Financial data about the two choices follows. (For the B14 Model, the present value in this scenario is 0.507 and the present value of annuity in this scenario is 4.111 For the F54 Model, the present value...
Cleveland Cove Enterprises is evaluating the purchase of an elaborate hydraulic lift system for all of...
Cleveland Cove Enterprises is evaluating the purchase of an elaborate hydraulic lift system for all of its locations to use for the boats brought in for repair. The company has narrowed their choices down to two: the B14 Model and the F54 Model. Financial data about the two choices follows. (For the B14 Model, the present value for this scenario is 0.322 and the present value of annuity is 5.65 For the F54 Model, the present value for this scenario...
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