NPV, Finance Basics

Assignment Help:
purchase a machine worth Shs.1,500,000 which will have a residue value Shs.200,000 after 5 years useful life. The saving in cost resulting from the use of this machine are:
Shs.
Year 1 800,000
Year 2 350,000
Year 3 -
Year 4 680,000
Year 5 775,000

Using NPV method, advise the company whether this machine should be purchased if the cut off rate is 14% and acceptable saving in cost is 12% of the cost of the investment.


Related Discussions:- NPV

Foreign credit insurance association (fcia), Foreign Credit Insurance Assoc...

Foreign Credit Insurance Association (FCIA) An agent of the Export/Import Bank, FCIA gives exporters with insurance coverage beside both commercial and political risk. The main

Determinants of required rate of return, Determinants of Required Rate of R...

Determinants of Required Rate of Return 1.Risk free rate - This is the interest rate such would exist on default free securities like Treasury bills and bonds. Risk free

Profit analysis, The Audiology Department at Randall Clinic offers many ser...

The Audiology Department at Randall Clinic offers many services to the clinic’s patients. The three most common , along with cost and utilization data, are as follows: Service Var

Stock market index, Stock Market Index Definition of Stock Market Ind...

Stock Market Index Definition of Stock Market Index An index is a numerical figure that measures relative change in variables between two type of durations. Examples

What is dependency ratio and why is it important, Question 1: a) What ...

Question 1: a) What is dependency ratio and why is it important for pensions? b) For which types of schemes is dependency ratio mostly relevant? Explain c) What is the

What is the process of investing in securities, What is the Process of Inve...

What is the Process of Investing in Securities ? There are several process of investing in securities:- (1) Finding a Broker (2) Selection of Brokers (3) Opening an Account w

Effective reach and effective frequency-insurance , Before purchasing insur...

Before purchasing insurance we have to go through different factors. Among different important factors there are two most crucial aspects we should consider before buying insurance

Gordeon''s Model, what is the price of the share net sales Rs.120lakhs ne...

what is the price of the share net sales Rs.120lakhs net profit margin 12.5% no. of equity shares 25,000 cost of equity shares 12% retention ratio 40% rate of interest(ROI) 16%

Insurance, new features of insurance?

new features of insurance?

Write Your Message!

Captcha
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