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Lana71 [14]
3 years ago
14

Byron Corp is considering the purchase of a new piece of equipment. The cost savings from the equipment would result in an annua

l increase in cash flow of $100,000. The equipment will have an initial cost of $400,000 and have a 5 year life. The salvage value of the equipment is estimated to be $75,000. If the hurdle rate is 10%, what is the approximate net present value
Business
1 answer:
-BARSIC- [3]3 years ago
7 0

Answer:

$25,647.78

Explanation:

The Net Present Value is the value today of future cashflows discounted by the effective interest rate. In this case the interest rate is the hurdle rate of 10%.

Using a financial calculator, this will be calculated by the CFj function as follows :

($400,000)    CF 0

$100,000       CF 1

$100,000       CF 2

$100,000       CF 3

$100,000       CF 4

$175,000        CF 5

i/yr = 10%

then SHIFT NPV

Inputting the data in the calculator above, we get a net present value of $25,647.78

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The above statement is true .

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5 0
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Product X-547 is one of the joint products in a joint manufacturing process. Management is considering whether to sell X-547 at
Katena32 [7]

Answer:

b. 1,2,3,4

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The last but not the least, the selling price of Xylene. If the management finds that if X-547 is further processed into Xylene and it sells at a highly favorable/lucrative price, creating a huge margin for them then definitely they would be encouraged to taking the decision of further processing it.

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