Carlin Company, which uses net present value to analyze investments, requires a 10% minimum rate of return. A staff assistant recently calculated a $740,000 machine's net present value to be $106,500, excluding the impact of straight-line depreciation. FV of 1 (i= 10%, n = 7): FV of a series of $1 cash flows (i= 10%, n = 7): PV of $1 (i= 10%; n = 7): PV of a series of $1 cash flows (i= 10%, n = 7): 1.949 9.487 0.513 4.868 If Carlin ignores income taxes and the machine is expected to have a seven-year service life, the correct net present value of the machine would be:
Carlin Company, which uses net present value to analyze investments, requires a 10% minimum rate of return. A staff assistant recently calculated a $740,000 machine's net present value to be $106,500, excluding the impact of straight-line depreciation. FV of 1 (i= 10%, n = 7): FV of a series of $1 cash flows (i= 10%, n = 7): PV of $1 (i= 10%; n = 7): PV of a series of $1 cash flows (i= 10%, n = 7): 1.949 9.487 0.513 4.868 If Carlin ignores income taxes and the machine is expected to have a seven-year service life, the correct net present value of the machine would be:
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter19: Capital Investment
Section: Chapter Questions
Problem 22E
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