vextra corporation is considering the purchase of new equipment costing $35,000. the projected annual cash inflow is $11,000, to be received at the end of each year for the next 4 years. vextra requires a 12% return on its investments. what is the net present value of the machine? $1,590.

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19-12-2022
Business

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vextra corporation is considering the purchase of new equipment costing $35,000. the projected annual cash inflow is $11,000, to be received at the end of each year for the next 4 years. vextra requires a 12% return on its investments. what is the net present value of the machine? $1,590.

Answer :

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anshumanaryan799 anshumanaryan799 · Answer 1 · 2022-12-24T04:41:26-05:00

Vextra corporation is considering the purchase of new equipment costing $35,000. the projected annual cash inflow is $11,000. The net present value of the machine = $ 1590.

step one is to compute the prevailing fee of annual cash inflows as shown under:

the present fee of the influx of cash = (Annual influx of cash * PVIFA rate, length)

that's

= $11,000 * PVIFA 12%, four

= $11,000 * three.0373

= $ 33,410

next step is to compute the internet value as proven within the equation below:

net present price = (gift cost of inflow of coins - investment)

that's

=$ 33, 410 - $ 35,000

= $1590

The net gift cost is = $ 1590

the outlet funding is $35,000 and the prevailing fee of inflow of cash is $33,410. for the reason that preliminary funding is extra than the present value of cash inflows, the net gift fee is visible as bad.

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