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Capital investment decision: net present value?
a company wants to invest 180,000 on a new machine. the investment must make at least a 20 percent return. given the folling projected cash flows:
Machine (180,000)-
Year 1 : 70,000
Year 2 : 60,000
Year 3 : 50,000
Year 4: 40,000
Year 5 : 30,000
Year 6: 20,000
need Factor?
Compute NPV?
Should the company make the investment?
1 Answer
- muleLv 61 decade agoFavourite answer
Based on the required 20% return, the NPV is negative 13,020. Therefore the company should not make this investment.
Source(s): pv tables
