Salsa Company is considering an investment in technology to improve its operations. The investment costs $241,000 and will yield the following net cash flows. Management requires a 9% return on investments. (PV of $1. FV of $1. PVA of $1, and EVA of $1) Note: Use appropriate factor(s) from the tables provided. Year 1 2 3 4 5 Net cash Flow $ 48,900 52,300 76,300 96,000 126,700. Required: 1. Determine the payback period for this investment. 2. Determine the break-even time for this investment. 3. Determine the net present value for this investment. 4. Should management invest in this project based on net present value?
Salsa Company is considering an investment in technology to improve its operations. The investment costs $241,000 and will yield the following net cash flows. Management requires a 9% return on investments. (PV of $1. FV of $1. PVA of $1, and EVA of $1) Note: Use appropriate factor(s) from the tables provided. Year 1 2 3 4 5 Net cash Flow $ 48,900 52,300 76,300 96,000 126,700. Required: 1. Determine the payback period for this investment. 2. Determine the break-even time for this investment. 3. Determine the net present value for this investment. 4. Should management invest in this project based on net present value?
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 13E: Buena Vision Clinic is considering an investment that requires an outlay of 600,000 and promises a...
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Please do not give image format and solve all required
Transcribed Image Text:Required a Required 2
Determine the payback period for this investment.
Note: Enter cash outflows with a minus sign. Round your Payback Period answer to 1 decimal place.
Intial investment
Year 1
Year 2
Year 3
Year 4
Year 5
Payback period
Year
<- req 1
Year
1
2
3
5
Not Cash Flows Cumulative Net Cash
Flows
$ (241,000) $
48,900
$
Required 3
Required 1
Net cash Flow
$ 48,900
52,300
76,300
96,000
126,700
52,300
76,300
96,000
126,700
159,200
40 years
Show Transcribed Text
Salsa Company is considering an investment in technology to improve its operations. The investment costs $241,000 and will yield the
following net cash flows. Management requires a 9% return on investments. (PV of $1. EV of $1. PVA of $1, and EVA of $1)
Note: Use appropriate factor(s) from the tables provided.
Required 4
Required 2
(241,000)
489,000
101,200
177,500
273,500
400,200
Required:
1. Determine the payback period for this investment
2. Determine the break-even time for this investment.
$
< Required 1
3. Determine the net present value for this investment
4. Should management invest in this project based on net present velue?
Complete this question by entering your answers in the tabs below.
Required 3
Required 2 >
Required 4
Determine the net present value for this investment.
Net present value
56,029
< Required 2
C
Required 4 >
Transcribed Image Text:Salsa Company is considering an investment in technology to improve its operations. The investment costs $241,000 and will yield the
following net cash flows. Management requires a 9% return on investments. (PV of $1. FV of $1. PVA of $1, and EVA of $1)
Note: Use appropriate factor(s) from the tables provided.
Year
1
2
3
4
5
Net cash Flow
$ 48,900
52,300
76,300
Required:
1. Determine the payback period for this investment.
2. Determine the break-even time for this investment.
96,000
126,700
3. Determine the net present value for this investment.
4. Should management invest in this project based on net present value?
Complete this question by entering your answers in the tabs below.
Required 1 Required 2
Year
Determine the break-even time for this investment.
Note: Enter cash outflows with a minus sign. Round your break-even time
Initial investment
Year 1
Year 2
Year 3
Year 4
Year 5
Break-even time=
Required 3
Net Cash Flows
$
Required 4
(241,000)
48,900
52,300
76,300
96,000
126,700
Present Value of Present Value of Net
Cash Flows per Year
1 at 9%
4.9 years
answer to 1 decimal place.
Present Value of
Cumulative
Net Cash Flows
< Required 1
Required 3 >
44,954
44,954
44,954
44,954
44,954
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