Question
A company is deciding whether to buy a machine. The machine costs GH¢28,000 and is expected...
A company is deciding whether to buy a machine. The machine
costs GH¢28,000 and is expected to generate a net cash flow of
GH¢10,000 each year during a productive life of 3 years. If the
cost of capital is 12%:
(a) Draw up a discounted cash flow table and hence calculate
the Net Present Value of the machine.
(b) Advice the company in the light of the situation.
Homework Answers
Answer #1
Not the answer you're looking for?
Similar Questions
A company can buy a machine that is expected to have a three-year life and a...
A company can buy a machine that is expected to have a
three-year life and a $40,000 salvage value. The machine will cost
$1,840,000 and is expected to produce a $210,000 after-tax net
income to be received at the end of each year. If a table of
present values of 1 at 12% shows values of 0.8929 for one year,
0.7972 for two years, and 0.7118 for three years, what is the net
present value of the cash flows from...
A company can buy a machine that is expected to have a three-year life and a...
A company can buy a machine that is expected to have a
three-year life and a $30,000 salvage value. The machine will cost
$1,800,000 and is expected to produce a $200,000 after-tax net
income to be received at the end of each year. If a table of
present values of $1 at 12% shows values of 0.8929 for one year,
0.7972 for two years, and 0.7118 for three years, what is the net
present value of the cash flows from...
A company can buy a machine that is expected to have a three-year life and a...
A company can buy a machine that is expected to have a
three-year life and a $34,000 salvage value. The machine will cost
$1,816,000 and is expected to produce a $204,000 after-tax net
income to be received at the end of each year. If a table of
present values of $1 at 12% shows values of 0.8929 for one year,
0.7972 for two years, and 0.7118 for three years, what is the net
present value of the cash flows from...
Your company is deciding whether to invest in a new machine. The new machine will increase...
Your company is deciding whether to invest in a new machine. The
new machine will increase cash flow by $329302 per year. You
believe the technology used in the machine has a 10-year life; in
other words, no matter when you purchase the machine, it will be
obsolete 10 years from today. The machine is currently priced at
$1,760,000. The cost of the machine will decline by $110,000 per
year until it reaches $1,320,000, where it will remain. The
required...
Your company is deciding whether to invest in a new machine. The new machine will increase...
Your company is deciding whether to invest in a new machine. The
new machine will increase cash flow by $331,841 per year. You
believe the technology used in the machine has a 10-year life; in
other words, no matter when you purchase the machine, it will be
obsolete 10 years from today. The machine is currently priced at
$1,760,000. The cost of the machine will decline by $110,000 per
year until it reaches $1,320,000, where it will remain. The
required...
Your company is deciding whether to invest in a new machine. The new machine will increase...
Your company is deciding whether to invest in a new machine. The
new machine will increase cash flow by $270,000 per year. You
believe the technology used in the machine has a 10-year life; in
other words, no matter when you purchase the machine, it will be
obsolete 10 years from today. The machine is currently priced at
$1,600,000. The cost of the machine will decline by $155,000 per
year until it reaches $980,000, where it will remain.
If...
The Aaron Oil Company is deciding whether to drill for oil on a tract of land...
The Aaron Oil Company is deciding whether to drill for oil on a
tract of land the company owns. The company estimates the project
would cost $10 million today. Aaron estimates that, once drilled,
the oil will generate positive net cash flows of $3.4 million a
year at the end of each of the next 5 years. Although the company
is fairly confident about its cash flow forecast, in 1 years it
will have more information about the local geology...
Your company is deciding whether to invest in a new machine. The new machine will increase...
Your company is deciding whether to invest in a new machine. The
new machine will increase cash flow by $180 per year and forever.
The machine is currently priced at $2,000. The cost of the machine
will decline by $25 per year until it reaches $1,800, where it will
remain. If your required return is 8%, should you purchase the
machine? If so, when should you purchase it? What is the value of
option to wait?
Option to Wait: Your company is deciding whether to invest in a new machine. The new...
Option to Wait: Your company is deciding whether to invest in a
new machine. The new machine will increase cash flow by $375,000
per year. You believe the technology used in the machine has a
10-year life; in other words, no matter when you purchase the
machine, it will be obsolete 10 years from today. The machine is
currently priced at $2,100,000. The cost of the machine will
decline by $150,000 per year until it reaches $1,350,000, where it
will...
The Karns Oil Company is deciding whether to drill for oil on a tract of land...
The Karns Oil Company is deciding whether to drill for oil on a
tract of land that the company owns. The company estimates the
project would cost $9 million today. Karns estimates that, once
drilled, the oil will generate positive net cash flows of $4.14
million a year at the end of each of the next 4 years. Although the
company is fairly confident about its cash flow forecast, in 2
years it will have more information about the local...
ADVERTISEMENT
Need Online Homework Help?
Get Answers For Free
Most questions answered within 1 hours.
ADVERTISEMENT
Active Questions
asked 2 minutes ago
asked 4 minutes ago
asked 11 minutes ago
asked 30 minutes ago
asked 30 minutes ago
asked 34 minutes ago
asked 53 minutes ago
asked 59 minutes ago
asked 1 hour ago
asked 1 hour ago
asked 1 hour ago
asked 1 hour ago