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melomori [17]
3 years ago
12

Baird Bros. Construction is considering the purchase of a machine at a cost of $125,000. The machine is expected to generate cas

h flows of $20,000 per year for 10 years and can be sold at the end of 10 years for $10,000. Interest is at 10%. Assume the machine purchase would be paid for on the first day of year one, but that all other cash flows occur at the end of the year. Ignore income tax considerations.
What is the net present value of the cash flows?
Business
1 answer:
andre [41]3 years ago
4 0

Answer:

$1,747

Explanation:

Given:

Generate Cash flows = $20,000 per year

Salvage value = $10,000

Interest = 10% = 0.10

Computation:

Net present value = PV of cash inflows - PV of cash outflow

= [($20,000 X 6.1446) + ($10,000 X 0.3855)] - $125,000

= [$122,892 + 3855] - $125,000

= $1,747

PV factor (for salvage value)

(1+r)^{-n}\\(1+0.10)^{-10}\\0.3855

Inflow PV factor = 6.1446

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Grace wants to become a manager at the bank where she is currently a teller. Which of the following goals would be appropriate f
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If amazon had decided to design and manufacture the kindle and all its components in the united states, what do you think the co
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Answer:

Brief summary of the case:

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Increase in the manufacturing cost will dilute their competitive advantage and it increases the cost of the product. It will lower the sales and the buyers would prefer to use the competitors' products, which are cheaper.

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On January 2, Haskins Company purchases a laser cutting machine for use in fabrication of a part for one of its key products. Th
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Answer:

Explanation:

Cost of machine - $80000

Useful life - 5 years

Salvage value -$5000

Depreciable amount = 80000-5000= 75000

Annual depreciation = 75000/5 = 15000

Year                    DR                       Accum Dep

Cost                                                                                   8000                  

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2               Depreciation  15000      30000

Year 3      Depreciation  15000      45000

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Financial statement template

Balanced sheet

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Cash asset + 65000  = liabilities + equity

Income statement

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