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Category > Biology Posted 18 Jun 2017 My Price 11.00

Denver Company is considering the purchase of equipmen

Denver Company is considering the purchase of equipment that would cost $40,000 and offer annual cash of $ 10,500 over its useful life of 5 years. Assuming a required rate of return of 8 % calculate the net present value. Would you recommend that Denver make this investment?

 


  • Statement showing calculation of NPV      
    Particulars Time PVF Amount PV
    Initial Investment 0.00 1.0000 (40,000.00) (40,000.00)
    PV of Cash Outflows       (40,000.00)
    Cash Inflows 1.00 0.9259 10,500.00 9,722.22
    Cash Inflows 2.00 0.8573 10,500.00 9,002.06
    Cash Inflows 3.00 0.7938 10,500.00 8,335.24
    Cash Inflows 4.00 0.7350 10,500.00 7,717.81
    Cash Inflows 5.00 0.6806 10,500.00 7,146.12
    PV of Cash Inflows       41,923.46
    NPV     1,923.46
             
    Time Working notes PVF    
    1.00 1/1.08 0.9259    
    2.00 .9259/1.08 0.8573    
    3.00 .8573/1.08 0.7938    
    4.00 .7938/1.08 0.7350    
    5.00 .7350/1.08 0.6806

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Status NEW Posted 18 Jun 2017 10:06 AM My Price 11.00

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