Answer:
NPV = $262,604.7
Explanation:
<em>The NPV is the difference between the PV of cash inflows and the PV of cash outflows. A positive NPV implies a good investment decision and a negative figure implies the opposite.
</em>
NPV of an investment:
NPV = PV of Cash inflows - PV of cash outflow
PV of annuity= 1 -(1+r)^(-n)/r × Annual cash flow
r- discount rate, n- number of years
PV of cashinflow = 133,000 × (1- 1.13^(-4))/0.13 =395,604.6863
NPV = 395,604.6863 - 133,000= 262,604.7
NPV = $262,604.7
Answer:
Pembroke= $105,000
Multinomah= $120,000
Explanation:
Giving the following information:
The materials used by the Multinomah Division of Isbister Company are currently purchased from outside suppliers at $90 per unit. These same materials are produced by the Pembroke Division.
The Pembroke Division can produce the materials needed by the Multinomah Division at a variable cost of $75 per unit. The division is currently producing 120,000 units and has capacity of 150,000 units. The two divisions have recently negotiated a transfer price of $82 per unit for 15,000 units.
Pembroke= 15,000*(82 - 75)= $105,000
Multinomah= 15,000*(90 - 82)= $120,000
