Y MARCH 28 2018 1. Leslie Kitchens has been asked by the president of her compan
ID: 2555900 • Letter: Y
Question
Y MARCH 28 2018 1. Leslie Kitchens has been asked by the president of her company to evaluate an investment project cash flow using the present worth analysis in hopes to meet the company's MARR of 15%. The initial investment is $1.8 million and at the end of year 1 there is an inflow of $454,000, year 2 is $681,000, year 3 through 6 is $908,000 and year 7 is $1,268,000. is this investment acceptable? (10pts). 2. In 2008 Depas Engineering offered to buyout Garver LLC for 50 million. Depas Engineering affered 350 million down and the remaining balance at the end of 2009. Their salary paymentsExplanation / Answer
Year Cash Inflows Present value factor @15% Discounted cash flows
1 $454,000 0.869565 $394,782.6
2 $681,000 0.756144 $514,933.8
3 $908,000 0.657516 $597,024.7
4 $908,000 0.571753 $519,151.9
5 $908,000 0.497177 $451,436.5
6 $908,000 0.432328 $392,553.5
7 $1,268,000 0.375937 $476,688.2
_____________ ____________
$6,035,000 $3,346,571
Present Value of total cash flows @15% will be $3,346,571 which is more than Intitial investment of $1,800,000.
Hence this investment is acceptable.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.