Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. 3) a firm considers to buy a new machine whose exp

3) A firm considers to buy a new machine whose expected lifetime is 6 years....

60.1K

Verified Solution

Question

Finance

image

3) A firm considers to buy a new machine whose expected lifetime is 6 years. The cost of the machine is $ 3 000 000 which is paid in 2022. The expected cash flows of this investment are as follows: 2023: $ 700 000 2024: $ 800 000 2025: $ 1 200 000 2026: $ 1 300 000 2027: $ 900 000 2028: $ 600 000 a) Find the net present value of this investment using a discount rate of 18% b) Should the firm accept or reject this investment (write accept or reject as your answer)? c) What is the expected contribution of that investment to the value of the firm (give a numerical answer)? d) Find the Pl value (profitability index) using the cost of investment and the expected cashflows of this problem and mention if the investment is accepted or rejected

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Zin AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Q

When Terry’s father hides his favorite toy under a blanket, he acts as though it no...

Psychology
Q

Why should salespeople have many techniques ready and available during a sales call?

Operations Management
Q

are cellular structures that serve as the site for protein synthesis OA Chloroplasts OB Ribosomes...

Biology
Q

Darlena has started taking photos at amateur dog racing events later offering the photos for...

Basic Math
Q

10 8 6 4 Ay 10 B 6 6 10 X 6 8 10

Algebra
Q

\table[[,\table[[PLASMA SCREENS CORPORATION],[Balance Sheets],[December 31,2024 and 2023]],2024,2023],[\table[[Assets],[Current assets:]]],[\table[[Current assets:],[Cash]],,$114,250,$128,400

Accounting
Q

Which of the following account for why companies decide to enter foreign markets? To build...

Accounting
Q

Assume the following: Estimated fixed manufacturing overhead for the coming period of $218,000...

Accounting
Q

Jason, Jerry and Jim are partners of Marvelous Enterprise and have been carrying on a...

Accounting
Q

Sidney wants to construct a strategy that delivers alpha with respect to the CAPM. Which...

Accounting
Q

Draw the payoff of the hedging strategy (i.e., (1) and (2) and it combination). 20...

Finance
Q

PLEASE URGENT HELP Problem 11-13 Operating Cash Flow and Leverage [LO4] A...

Finance