Exercise 24-19 (Algo) Net present value; internal rate of return; equal cash flows LO P3,...
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Exercise 24-19 (Algo) Net present value; internal rate of return; equal cash flows LO P3, P4 Quary Company is considering an investment in machinery with the following information. The company's required rate of return is 15%. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Initial investment Useful life Salvage value Expected sales per year $ 350,000 Materials, labor, and overhead (except depreciation) 7 years Depreciation-Machinery $ 21,700 Selling, general, and administrative expenses 11,000 units Selling price per unit $ 62,000 37,000 22,000 $ 14 a. Compute the investment's net present value. b. Using the answer from part a, is the investment's internal rate of return higher or lower than 15%? Complete this question by entering your answers in the tabs below. Required A Required B Compute the investment's net present value. (Negative net present values should be indicated with a minus sign. Round your present value factor to 4 decimals. Round your answers to the nearest whole dollar.) Chart Values are Based on: n= 15 % Cash Inflow Present Value Year Years 1-7 Year 7 salvage PV Factor 4.1604 = 21,700 X $ 0 Present value of cash inflows Initial investment Net present value 350,000
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