Calculate the net present value of this investment

Assignment Help Finance Basics
Reference no: EM133715936

Question: "UMPI Inc. is considering the purchase of a street paver machine for $225,000. The expected life of the machine will be three years, and it will have a salvage value of $25,000. Annual maintenance costs will total $7,500. Annual savings are predicted to be $92,500. The company's required rate of return is 8%. Ignoring the TVM, calculate the net cash inflow or outflow resulting from this investment opportunity. Be sure to prepare the schedule that clearly depicts the time frame of the cash flows.

1) Using the Present Value Factors for $1 at 8% noted above (table provided for reference), calculate the net present value of this investment (ignoring taxes)

2) Based on your answer in requirement 1: should UMPI purchase the street paver machine?

Reference no: EM133715936

Questions Cloud

Intervention mapping for the health issue : Discuss what health promotion, healthy behavior, or change you believe needs to occur to decrease the health issue or health concern that you chose.
What is the size of the replacement payment : make a single payment today if money is worth 4.8% and the agreed focal date is today what is the size of the replacement payment
Do random acts of terrorism such as boston marathon bombing : Do random acts of terrorism such as the Boston Marathon bombing, the Fort Hood shooting, and the Pulse Nightclub attack achieve terrorist goals?
Analyzing the social development of humans : Which theory do you find the most interesting and/or valid when analyzing the social development of humans?
Calculate the net present value of this investment : Calculate the net present value of this investment (ignoring taxes) 2) Based on your answer in requirement 1: should UMPI purchase the street paver machine
Highlights the profound impact skilled and empathetic nurse : AI rewrite Cassie's experience highlights the profound impact a skilled and empathetic nurse can have on a patient's hospital journey.
Explain how you see the issue of measurement when you read : In this discussion, explain how you see the issue of measurement when you read coursework or outside material related to criminal justice.
What would be the total value of your mortgage : What would be the total value of your mortgage that you need to get from Chase? 2) What would be your monthly payment
How many months will money double : How many months will money double at 5% p a compounded monthly semi annually? state your answer in years and months

Reviews

Write a Review

Finance Basics Questions & Answers

  Calculating the payment for an ira plan

Calculating the payment for an IRA plan where contributions are made every other week.

  Expected return and standard deviation of portfolio

An investor put 60 percent of his money into a risky asset offering a 10 percent return with a standard deviation of return of 8 percent, and he put the balance

  What is the cost of the first and the second ratio

The second ratio spread uses three 105-strike calls for one long 100-strike call. What is the cost of the first and the second ratio spread respectively?

  Compute the tension force in each bolt

When a doublet is added to a uniform stream so that the source part of the doublet faces the stream, a cylinder flow results. Plot the streamlines when the doublet is reversed so that the sink faces the stream.

  Value maximization as a basis for examining managerial

Does such behavior create problems in using value maximization as a basis for examining managerial decision-making?

  Heavenly hotels inc will not pay any dividends for the next

heavenly hotels inc. will not pay any dividends for the next three years. heavenly will pay its first dividend of 2.00

  Briarcrest condiments is a spice-making firm recently it

briarcrest condiments is a spice-making firm. recently it developed a new process for producing spices. the process

  What would happen to the stocks required rate of return

what would happen to the stock's required rate of return? Assume that the risk-free rate and the beta remain unchanged.

  A company needs to buy a building in 4 years and must fund

a company needs to buy a building in 4 years and must fund the down payment from its profits. the purchase will cost

  What is the dividend yield

You purchased 520 shares of stock at a price of $58.17 per share. Over the last year, you have received total dividend income of $605.

  Distinguish between construct and criterion-related validity

Distinguish between convergent and discriminant validity. Do these terms refer to types of construct validity or criterion-related validity?

  Why management should be concerned about priority systems

Explain why management should be concerned about priority systems in manufacturing and service organizations.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd