Asaki Company accumulates the following data…

Question:

Asaki Company accumulates the following data concerning a proposed capital investment: cash cost $220,000, net annual cash flows $40,000, present value factor of cash inflows for 10 years 5.65 (rounded). Determine the net present value, and indicate whether the investment should be made.

Answer:

40,000*5.65 = 226,000
226,000 – 220,000 = 6,000

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