am 4 Ch 23, 24 & 17 Saved The following present value factors are provided for u

Question

am 4 Ch 23, 24 & 17 Saved The following present value factors are provided for use in this problem. 21 Present value of Present value an annuity of 1 at Periods 9% 0.9174 1.7591 2.5313 3.2397 of 1 at 9% . 0.9174 0.8417 0.7722 0.7084 01:09:48 2 3 4 Cliff Co. wants to purchase a machine for $82,000, but needs to earn an 9% return. The expected year-end net cash flows are $32,000 in each of the first three years, and $36,000 in the fourth year. What is the machine's net present value (round to the nearest whole dollar)? Multiple Choice $(998). $24,504 $106,504. $(56,498) $132,000. Haln

Explanation / Answer

21 Year Cashflows Discounting factor PV 0 -82000 1 -82000 1-3 32000 2.5313 81002 4 36000 0.7084 25502 NPV 24504 22 Cost 138300 No of years 4 Average Annual Investment 34575 24 Year Cashflows Discounting factor PV 0 -28000 1 -28000 1 12000 0.9091 10909 2 13000 0.8264 10743 3 12000 0.7513 9016 NPV 2668 25 Year Cashflows Discounting factor PV 0 -35000 1 -35000 1-4 11000 3.0373 33410 NPV -1590 26 A minimum acceptable rate of return for an investment decision is called the hurdle rate of return

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