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The management of Idaho Corporation is considering the purchase of a new machine costing $430,000. The company's desired rate of return is 10%. The present value factors for $1 at compound interest of 10% for 1 through 5 years are 0.909, 0.826, 0.751, 0.683, and 0.621, respectively. In addition to the foregoing information, use the following data in determining the acceptability of this investment: Year Operating Income   Net Cash Flow 1 $100,000       $180,000     2 40,000       120,000     3 20,000       100,000     4 10,000       90,000     5 10,000       90,000     The net present value for this investment is

The management of Idaho Corporation is considering the purchase of a new machine costing $430,000. The company's desired rate of return is 10%. The present value factors for $1 at compound interest of 10% for 1 through 5 years are 0.909, 0.826, 0.751, 0.683, and 0.621, respectively. In addition to the foregoing information, use the following data in determining the acceptability of this investment: Year Operating Income   Net Cash Flow 1 $100,000       $180,000     2 40,000       120,000     3 20,000       100,000     4 10,000       90,000     5 10,000       90,000     The net present value for this investment is

Principles of Accounting Volume 2
Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 18EB: Garnette Corp is considering the purchase of a new machine that will cost $342,000 and provide the...
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The management of Idaho Corporation is considering the purchase of a new machine costing $430,000. The company's desired rate of return is 10%. The present value factors for $1 at compound interest of 10% for 1 through 5 years are 0.909, 0.826, 0.751, 0.683, and 0.621, respectively. In addition to the foregoing information, use the following data in determining the acceptability of this investment:

Year

Operating
Income

  

Net Cash
Flow

1

$100,000    

  

$180,000    

2

40,000    

  

120,000    

3

20,000    

  

100,000    

4

10,000    

  

90,000    

5

10,000    

  

90,000    

The net present value for this investment is

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