Find the net present value, Operation Management

Assignment Help:

The company is considering a capital expenditure of $480,000. It has an estimated life of 4 years and no salvage value. The estimated net income and new cash flow from the project are as follows:

Year 1 Net Income $90,000 Net Cash Flow $210,000

Year 2 Net Income 80,000 Net Cash Flow 200,000

Year 3 Net Income 40,000 Net Cash Flow 160,000

Year 4 Net Income 30,000 Net Cash Flor 150,000

Totals $240,000 $720,000

The company's minimum rate of return for net present value analysis is 15%. The present value of $1 at compound interest of 15% for 1, 2, 3, and 4 years is .870, .756, .658 and .572 respectively.

Determine:

a) the average rate of return on investment using straight line depreciation

b) the net present value

c) cash payback period (use actual forecasts, not averages).

NOTE: Please do not round

Related Discussions:- Find the net present value

Explain organizations achieving competitive advantage, Discuss the influenc...

Discuss the influence of the four focus areas for HR professionals on solving HRM related issues associated with organizations achieving competitive advantage.

Explain about the economics of scope of lean production, Explain about the ...

Explain about the economics of scope of lean production. Economies of scope: It is possible while resources as like machinery or labour can be shared to manufacture vari

Operation management functions, Operation Management functions Operatio...

Operation Management functions Operations Management has many functions to carry out the transformation procedure efficiently. The function incorporates various roles which are

Explain what does corporate strategy ensure, What does corporate strategy e...

What does corporate strategy ensure?

Explain ethics becomes less practical, Which among the following frameworks...

Which among the following frameworks of ethics becomes less practical with an increase in the number of people, animals, etc. that could be affected by decisions made?

Case an American Tragedy: How a Good Company Died?, Do you think that inade...

Do you think that inadequate strategic planning was a factor that resulted in the company''s asking for trade protection?

Explain what is the time between orders, The current order quantity for Pau...

The current order quantity for Paul's Pasta Pinwheels is 200 boxes. The order cost is $4 per order, the holding cost is $0.40 per box per year, and the annual demand is 500 boxes p

Aspects of operation strategy, Aspects of Operation Strategy There ar...

Aspects of Operation Strategy There are three levels of strategy hierarchy illustrated in the following table: Van der Heijden (1997) suggests that there are three sc

Describe the response of the organization, The issue of fraud must be consi...

The issue of fraud must be considered when managing risk as it could present a major liability to the organization. Fraud is an act that requires an aggressive response and correct

Compute number of workers needed for each department, Calculate number of w...

Calculate number of workers needed for each department to produce 2000 units per day and complete the table below to assist you in answering questions e.)è?j.). (e) What is the tot

Write Your Message!

Name

Email id

Message

Verfication Code

User Account

All Pages