Question

Beyer Company is considering the purchase of an asset for $190,000. It is expected to produce the following net cash flows. The cash flows occur evenly within each year. Assume that Beyer requires a 15% return on its investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)

	Year 1				Year 2				Year 3				Year 4				Year 5				Total
Net cash flows		$	78,000			$	46,000			$	84,000			$	169,000			$	53,000			$	430,000

a. Compute the net present value of this investment. (Round your answers to the nearest whole dollar.)

year	Net cash flows	Present value of 1 at 15%	Present value of net cash flows
1
2
3
4
5
totals
Amount invested
Net present value

b. Should Beyer accept the investment?
  

Yes

No

Answer 1

for formulas and calculations, refer to the image below -