Saturday, 17 October 2015

Beyer Company is considering the purchase of an asset for $180,000. It is expected to produce the

Exercise 24-2 Net present value LO P3
Beyer Company is considering the purchase of an asset for $180,000. It is expected to produce the following net cash flows. The cash flows occur evenly throughout each year. Assume that Beyer requires a 10% return on its investments. (FV of $1, PV of $1, FVA of $1 and PVA of $1) (Use appropriate factor(s) from the tables provided.)

   Year 1 Year 2 Year 3 Year 4 Year 5 Total
  Net cash flows   $ 60,000     $ 40,000     $ 70,000     $ 125,000     $ 35,000     $ 330,000  




Compute the net present value of this investment.

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