Beyer Company is considering the purchase of an asset for $195,000. It is expect
ID: 2399277 • Letter: B
Question
Beyer Company is considering the purchase of an asset for $195,000. It is expected to produce the following net cash flows. The cash flows occur evenly within each year. Assume that Beyer requires a 9% return on its investments. (PV of $1. EV of $1, PVA of $1, and FVA of $1 (Use appropriate factor(s) from the tables provided.) Year 5 Total Year 1 $81,000 $57,000 $82,00 $159,90 $39,000 $418,000 Year 2 Year 3 Year 4 Net cash flows a. Compute the net present value of this investment. (Round your answers to the nearest whole dollar.) Net Cash Flows Present Value of 1 at996 Present Value of Net Cash Flows Year $ (195,000) Totals Amount invested Net present value S (195,000) b. Should Beyer accept the investment? O Yes O NoExplanation / Answer
Dear Student Thank you for using Chegg Please find below the answer Statementshowing Computations Year Net Cash flows PV of 1 at 9% PV of net cash flows 1.00 81,000.00 0.9174 74,311.93 2.00 57,000.00 0.8417 47,975.76 3.00 82,000.00 0.7722 63,319.05 4.00 159,000.00 0.7084 112,639.61 5.00 39,000.00 0.6499 25,347.32 Totals 418,000.00 323,593.66 Amount Invested (195,000.00) Net present Value 128,593.66 Yes Beyer should accept investment as NPV is positive
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