Door to Door Moving Company is considering purchasing new equipment that costs $
ID: 2405353 • Letter: D
Question
Door to Door Moving Company is considering purchasing new equipment that costs
$ 710 comma 000$710,000.
Its management estimates that the equipment will generate cash inflows as? follows:
Year 1
$ 202 comma 000$202,000
2
202 comma 000202,000
3
270 comma 000270,000
4
270 comma 000270,000
5
164 comma 000164,000
Present value of? $1:
?6%
?7%
?8%
?9%
?10%
1
0.943
0.935
0.926
0.917
0.909
2
0.890
0.873
0.857
0.842
0.826
3
0.840
0.816
0.794
0.772
0.751
4
0.792
0.763
0.735
0.708
0.683
5
0.747
0.713
0.681
0.650
0.621
The? company's annual required rate of return is? 8%. Using the factors in the? table, calculate the present value of the cash inflows.? (Round all calculations to the nearest whole? dollar.)???
Year 1
$ 202 comma 000$202,000
2
202 comma 000202,000
3
270 comma 000270,000
4
270 comma 000270,000
5
164 comma 000164,000
Explanation / Answer
Cash inflows PV factors at 8% Present value $202,000 0.926 $187,052 $202,000 0.857 $173,114 $270,000 0.794 $214,380 $270,000 0.735 $198,450 $164,000 0.681 $111,684 $884,680
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