Question

Beyer Company is considering the purchase of an asset for $190,000. It is expected to produce the following net cash flows. The cash flows occur evenly within each year. Assume that Beyer requires a 15% 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.) Net cash flows Year 1 $82,000 Year 2 $55,000 Year 3 $77,000 Year 4 $143,000 Year 5 $48,000 Total $405,000 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 15% Present Value of Net Cash Flows 1 2 3 4 5

Answer 1

a) NPV of Investment
(If PV Factor take for 3 decimal point)
Year	Net Cashflow	Present Value of 1 @15%	Present Value of net cash flow
1	82,000	0.870	71,340
2	55,000	0.756	41,580
3	77,000	0.658	50,666
4	143,000	0.572	81,796
5	48,000	0.497	23,856
Totals	405,000		269,238
Amount Invested			190,000
Net present Value			79,238
a) NPV of Investment
(If PV Factor take for 4 decimal point)
Year	Net Cashflow	Present Value of 1 @15%	Present Value of net cash flow
1	82,000	0.8696	71,307
2	55,000	0.7561	41,586
3	77,000	0.6575	50,628
4	143,000	0.5718	81,767
5	48,000	0.4972	23,866
Totals	405,000		269,153
Amount Invested			190,000
Net present Value			79,153
a) NPV of Investment
(If PV Factor take for 5 decimal point)
Year	Net Cashflow	Present Value of 1 @15%	Present Value of net cash flow
1	82,000	0.86957	71,305
2	55,000	0.75614	41,588
3	77,000	0.65752	50,629
4	143,000	0.57175	81,760
5	48,000	0.49718	23,865
Totals	405,000		269,146
Amount Invested			190,000
Net present Value			79,146
b)	Yes, accept the investment