Problem 15-49 Name:
Insert your answers in the gray-shaded cells or select from the drop-down list.
If an answer is incorrect, the word “wrong” will appear.
a.
Point
in
Time
Description Cash Flows x
Discount
Factor
=
Present
Value
0 Incremental cost (568,000)$ 1.0000 (568,000)$
1-8 Cost savings 120,000$ 5.3349 640,188
NPV 72,188$
Cost savings Investment = Profitability Index
$640,188 $568,000 1.13
Based on NPV and PI, the machine
b.
Net investment Cost savings = Payback
568,000 120,000$ 4.73 years
c.
Net investment Annual annuity = Discount factor of IRR
568,000 120,000$ 4.7333
Percent
be purchased.
should
Solution
Solution