Accounting

1 . A firm wishes to bid on a cut that is expected to yield the following after-tax pass bills flows at the end of each form (see the .To secure the wince , the firm must spend 30 ,000 to retool its establish . This retooling will have no salvage value at the end of the eight years . Comparable investment funds alternatives be available to the firm that earn 12 percent come to the fore annually . The depreciation tax benefit from the retooling s reflected in clear up cash flows in the tablea ) Compute the project s net act valueb ) Should the project be adoptedc ) What is the meaning of the computed net apply tense value figureSolutionYear 0 1 2 3 4 5 6 7 8cash flow5000 8000 9000 8000 8000 5000 3000 -1500present value -30 ,000 4 ,464 .29 6 ,377 .55 6 ,406 .02 5 ,084 .14 4 ,539 .41 2 ,533 .16 1 ,357 .05 605 .82 plunder Present rate Present value - Initial coronation 155 .80 30 ,155 .80 - 30 ,000The simoleons Present Value is 155 .80The project should be reliable because the NPV is positiveThe NPV means that the present value of all cash flows from year 1 to year 8 less the initial investment for retooling the plant , which is 30 ,000 , is 155 .80 . It means that the value of the riches of the company increase by 155 .80See section paginate 1...If you want to loll a full essay, order it on our website: OrderCustomPaper.com

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