(Q2) Hsung Company accumulates the following data concerning a proposed capital investment: cash cost $215,000, net annual cash flows $40,000, present value factor of cash inflows for 10 years 5.65 (rounded) (per Table 4 AppendixG).
Determine the net present value, and indicate whether the investment should be made.
Year | Cash Flow | PVF | Discounted cash flow |
0 | 2,15,000 | 1 | (2,15,000) |
1-10 | 40,000 | 5.65 | 2,26,000 |
NPV | 11,000 |
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