Question

Beyer Company is considering the purchase of an asset for $180,000. It is expected to produce the following net cash flows. The cash flows occur evenly within each year. Assume that Beyer requires a 12% return on its investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)

	Year 1				Year 2				Year 3				Year 4				Year 5				Total
Net cash flows		$	82,000			$	56,000			$	74,000			$	134,000			$	50,000			$	396,000

a. Compute the net present value of this investment.
b. Should Beyer accept the investment?


Complete this question by entering your answers in the tabs below. Required A Required B Compute the net present value of this investment. (Round your answers to the nearest whole dollar.) Year Net Cash Flows Present Value of 1 at 12% Present Value of Net Cash Flows $ 1 82,000 56,000 74,000 134,000 50,000 396,000 Totals $ $ 0 Amount invested Net present value $ 0 < Required A Required B >

Answer 1

a) Computation of Net present value year Net cash flow présent value of 1 p.Vol Nel cash flows 0.893 73226 82000 44632 0.797 56000 0.712 52688 74000 0.636 85224 134000 10.567 28350 50000 Total R $ 284120 inflows NPV ENet present value) = sum of discounted cash sum of discounted cash out flows . Investment) = 284120 - 180000 = $104/20 b) NPV(nee present value) is zo le positive ($104120), so Beyer accept the investment, ALL THE BEST HAPPY CHEEGGING,