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Vlad [161]
2 years ago
9

"Roper Spring Water" is considering a new bottling line that costs $230,000, last 4 years, and yields cost savings of $55,000 in

year 1, $65,000 in year 2, and $75,000 in years 3 and 4. If the interest rate is 7%, what is the net present value of the machine? Should Roper Spring Water buy the machine?
Business
1 answer:
Tcecarenko [31]2 years ago
8 0

Answer:

Roper Spring Water should not buy the machine, since it produces a negative net present.

Explanation:

Summary of Cash Flows on the Machine are as follows :

Year 0 = ($230,000)

Year 1  = $55,000

Year 2 = $65,000

Year 3 = $75,000

Year 4 = $75,000

Interest rate = 7%

Using the CFj Function of the Financial calculator this will be computed as :

($230,000)  CF j 0

$55,000      CF j 1

$65,000      CF j 2

$75,000      CF j 3

$75,000      CF j 4

i/yr  = 7%

Therefore Net Present Value is - $3,385.13

Since this is a negative Net Present Value, Roper Spring Water should not buy the machine.

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diamong [38]

Answer:

No,  as the net present value comes in negative

Explanation:

As we know that

Net present value = Present value of cash inflows - Initial investment

where,

Present value os $163,000

And, the initial investment is $180,000

Now placing these values to the above formula

So, the net present value is

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= -$17,000

Therefore the company should not accept the project as net present value is in negative that is -$17,000

6 0
3 years ago
Sanders, Inc., paid a $4 dividend per share last year and is expected to continue to pay out 60% of its earnings as dividends fo
solong [7]

Answer:

The correct solution is "$42.94".

Explanation:

The given values are:

D0 = 4

Ks = 15%

As we know,

⇒ g = (1-Div \ payout \ ratio)\times ROE

      =(1-60 \ percent)\times 13 \ percent

      =5.20 \ percent

By using the Gordon Model, we get

⇒ P0=Do\times \frac{(1+g)}{(Ks-g)}

         =4\times \frac{ (1+5.20 \ percent)}{(15 \ percent-5.20 \ percent)}

         =42.94 ($)

6 0
2 years ago
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kirza4 [7]
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Andre45 [30]

Answer:

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Explanation:

Licensing <em>is a business agreement whereby one company gives authorization to another company to produce its product for a defined fee.</em>

Licensing allows you to immediately tap current manufacturing, marketing and distribution systems which may have been built by other companies for decades.

8 0
3 years ago
What happens when you do not make a decision?
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Making decisions are always an important part. But failure in making decision may cause something unexpected. in most of the time a right decision at right time helps a lot... so for making a good decision one should follow some steps- like what are the good aspect if someone take this decision and what are the negative impact of this decision and if the probability of positiveness is more... than one should take that decision.. and if someone have confusion between what to do? and have to decide which decision to take among many ideas in mind  one should do the same steps but this time he/she should write them in a page for each decision a single page and than take the one which is prominent..
4 0
3 years ago
Read 2 more answers
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