2 Beyer Company Is considering the purchase of an asset for $245,000. It is expe

Question

2 Beyer Company Is considering the purchase of an asset for $245,000. It is expected to produce the following net cash flows. The cash flows occur evenly within each year. Assume that Beyer requires a 15% return on its investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1 (Use approprlate factor(s) from the tables provlded.) Year 1 Year 2 Year 3 Year 4 Year5 $67,0e0 $41,00 $72, $132,0 $49,900 $361,0ee points Net cash flows a. Compute the net present value of thls Investment. (Round your answers to the nearest whole dollar.) eBook Present Present Value Net Cash Value of 1 Year of Net Cash Flows Hint at 15% Flows Print References Totals Amount invested Net present value b. Should Beyer accept the Investment? Yes O No

Explanation / Answer

a) Calculate net present value :

b) No Beyer should not accept the investment

Year Net cash flow Present value of $1 @15% Present value of net cash flow 1 67000 0.8696 58263 2 41000 0.7561 31000 3 72000 0.6575 47340 4 132000 0.5718 75478 5 49000 0.4972 24363 Total 361000 2364444 Amount invested -245000 Net present value -8556

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