Baird Bros. Construction is considering the purchase of a machine at a cost of $

Question

Baird Bros. Construction is considering the purchase of a machine at a cost of $200,000. The machine is expected to generate cash flows of $39,000 per year for 10 years and can be sold at the end of 10 years for $29,000. Interest is at 11% Assume the machine purchase would be paid for on the first day of year one, but that all other cash flows occur at the end of the year. Ignore income tax considerations. (FV of $1. PV of $1. FVA of $1. PVA of $1, EVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required a. What is the net present value of the cash flows? b. Determine whether Baird should purchase the machine. Complete this question by entering your answers in the tabs below Required FRequired B What is the net present value of the cash flows? (Round your intermediate and final answer to nearest whole dollar.) et present value Required B>

Explanation / Answer

discount present year Cash factor at value 11% 0 -200,000 1 -200000 1---10 39,000 5.88923 229680 10 29,000 0.35218 10213 Net present value 39893 Yes - Baird should purchase the machine

Related Questions

Navigate

• Browse (All)
• Browse B
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.