1 answer

The following present value factors are provided for use in this problem. Periods Present Value of...

Question:

The following present value factors are provided for use in this problem.

Periods Present Value
of $1 at 8%
Present Value of an
Annuity of $1 at 8%
1 0.9259 0.9259
2 0.8573 1.7833
3 0.7938 2.5771
4 0.7350 3.3121

Xavier Co. wants to purchase a machine for $37,100 with a four year life and a $1,100 salvage value. Xavier requires an 8% return on investment. The expected year-end net cash flows are $12,100 in each of the four years. What is the machine's net present value?


Answers

rate positively ..

Computation of present value
i ii iii iv=ii*iii
year Cash flow PVIF @ 8% present value
0 -37100                    1.0000      (37,100.00)
1 12100                    0.9259        11,203.39
2 12100                    0.8573        10,373.33
3 12100                    0.7938          9,604.98
4 13200                    0.7350          9,702.00
         3,783.70
Therefore net present value =          3,783.70
.

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