UESTION NO. 3 hat is the present välue of cash inflow from purchasing the tractor? ur answer UESTION NO. 4 "hat is the net present volue of purchasing the tractor, accept or reject?

Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 5EB: A grocery store is considering the purchase of a new refrigeration unit with an Initial Investment...
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Use the following information for the next TWO (2) questions:
A farm must decide whether or not to purchase a new tractor. The tractor will reduce costs by P2, 000 in the first year, P2, 500
in the second, and P3, 000 in the third and final year of usefulness. The tractor costs P9, 000 today, wihile the above cost savings
will be realized at the end of each year. If the interest rate is 7 percent.
QUESTION NO. 3
What is the present value of cash inflaw from purchasing the tractor?
Your answer
QUESTION NO.4
What is the net present volue of purchasing the tractor, accept or reject?
Your ariswer
Transcribed Image Text:Use the following information for the next TWO (2) questions: A farm must decide whether or not to purchase a new tractor. The tractor will reduce costs by P2, 000 in the first year, P2, 500 in the second, and P3, 000 in the third and final year of usefulness. The tractor costs P9, 000 today, wihile the above cost savings will be realized at the end of each year. If the interest rate is 7 percent. QUESTION NO. 3 What is the present value of cash inflaw from purchasing the tractor? Your answer QUESTION NO.4 What is the net present volue of purchasing the tractor, accept or reject? Your ariswer
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ISBN:
9781947172609
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OpenStax
Publisher:
OpenStax College