Briarcrest Condiments is a spice-making firm. Recently, it developed a new proce

Question

Briarcrest Condiments is a spice-making firm. Recently, it developed a new process for producing spices. The process requires new machinery that would cost $2,456,232. have a life of five years, and would produce the cash flows shown in the following table.

Year

Cash Flow

1

$497,326

2

-182,123

3

825,636

4

695,762

5

707,012

What is the NPV if the discount rate is 14.72 percent? (Enter negative amounts using negative sign e.g. -45.25. Round answer to 2 decimal places, e.g. 15.25.)

  

Year

     

Cash Flow

     

1

     

$497,326

     

2

     

-182,123

     

3

     

825,636

     

4

     

695,762

     

5

     

707,012

   Briarcrest Condiments is a spice-making firm. Recently, it developed a new process for producing spices. The process requires new machinery that would cost $2,456,232. have a life of five years, and would produce the cash flows shown in the following table. What is the NPV if the discount rate is 14.72 percent? (Enter negative amounts using negative sign e.g. -45.25. Round answer to 2 decimal places, e.g. 15.25.)

Explanation / Answer

NPV = -2456232 + 497326/1.1472 - 182123/1.1472^2 + 825636/1.1472^3 + 695762/1.1472^4 + 707012/1.1472^5 = -856726.78

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