9.3 Please find the NPV and if the firm should accept or reject the project Prob

Question

9.3
Please find the NPV and if the firm should accept or reject the project Problem 9.3 Crescent Industries management is planning to replace some existing machinery in its plant. The cost of the new equipment and the resulting cash flows are shown in the accompanying table. If the firm uses an 18 percent discount rate for project. Year Cash Flow 0 -$3,100,100 874,910 $942,400 3 1,202,000 4 $1,294,560 S $1,541,800 What is the NPV of this project? (Enter negative amounts using negative sign e.g. -45.25. Do not round discount factors. Round intermediate calculations to 4 decimal places, e.g. 1.2514 and final answer to 2 decimal places, e.g. 15.25.) The NPV is s Should management go ahead with the project? The firm shoul project. accept reject Click if you w Show Work for this question: Open Show Work

Explanation / Answer

Statement Showing NPV Cash Flow Year PVF @18% PV (3,100,100.00) 0 1 -3100100         874,910.00 1 0.847457627 741449.2         942,400.00 2 0.71818443 676817      1,202,000.00 3 0.608630873 731574.3      1,294,560.00 4 0.515788875 667719.6      1,541,800.00 5 0.437109216 673935 NPV 391395.1 SINCE THE NPV IS POSITIVE, MANAGEMENT SHOULD GO AHEAD WITH THE ROJECT

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