Muncy, Inc., is looking to add a new machine at a cost of $4,133,250. The company expects this...
Question:
Muncy, Inc., is looking to add a new machine at a cost of $4,133,250. The company expects this equipment will lead to cash flows of $815,822, $863,275, $937,250, $1,019,110, $1,212,960, and $1,225,000 over the next six years. If the appropriate discount rate is 15 percent, what is the NPV of this investment?
Net Present Value:
Net Present value id an important capital budgeting method that is used to calculate the feasibility of the project. If the NPV is positive then the project is accepted else it is rejected.
Answer and Explanation: 1
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View this answerTo Calculate Net Present Value of the project we need to deduct Present Value of cash inflow from initial Cash outflow.
Net Present Value = PV of...
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Evaluating a Budget Using the Net Present Value Method
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Chapter 14 / Lesson 3
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The net present value (NPV) method considered future cash flows to evaluate the value of capital projects—those that increase or decrease an enterprise's value. Learn how this method is calculated and guides budget decisions.
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