Sentinel Company is considering an investment in technology to improve its opera

Question

Sentinel Company is considering an investment in technology to improve its operations. The investment will require an initial outlay of $249,000 and will yield the following expected cash flows. Management requires investments to have a payback period of 2 years, and it requires a 10% return on investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the table provided.)

Determine the payback period for this investment. (Enter cash outflows with a minus sign. Round your answer to 1 decimal place.)

Determine the break-even time for this investment. (Enter cash outflows with a minus sign. Round your answer to 1 decimal place.)

Determine the net present value for this investment.

Sentinel Company is considering an investment in technology to improve its operations. The investment will require an initial outlay of $249,000 and will yield the following expected cash flows. Management requires investments to have a payback period of 2 years, and it requires a 10% return on investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the table provided.)

Explanation / Answer

its payback period is = 3 years + (70,600/95,800)12

=3years 8 months

2.

its NPV= 289,068.7-249,000

= $40,068.7

yrs cash table value@10% pv of cash inflows cumulative value 1 48300 0.909 43904.7 43,904.7 2 53900 0.826 44521 88,425.7 3 76200 0.751 57226 145,651.7 4 95800 0.683 65431 211,082.7 5 125800 0.620 77996 289,068.7

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