Question

Beyer Company is considering the purchase of an asset for $235.000. It is expected to produce the following net cash flows. The cash flows occur evenly within each year. Assume that Beyer requires a 12% return on its investments PV of $1. FV of $1. PVA of $1. and EVA of $1 (Use appropriate factor(s) from the tables provided.) Year 2 Year 5 $59.000 Total 5425.000 Net cash flows 573.000 $51.000 $144,000 $98.000 a. Compute the net present value of this investment (Round your answers to the nearest whole dollar.) Year Net Cash Flows Present Value of 1 at 12% Present Value of Net Cash Flows Amount invested Net present value b. Should Beyer accept the investment? Yes No

thats all the info provided to me

Answer 1

Net present value is calculated as present value of cash inflow less present value of cash outflow
In order to calculate present of cash flow we would use PV of $1 since the cash flow amounts are uneven
a.
Calculation of net present value of this investment is shown below
Year	Net cash flows	Present value of 1 at 12%	Present value of net cash flows
1	$73,000	0.8929	$65,182
2	$51,000	0.7972	$40,657
3	$98,000	0.7118	$69,756
4	$144,000	0.6355	$91,512
5	$59,000	0.5674	$33,477
Totals	$425,000		$300,584
Amount invested			$235,000
Net present value			$65,584
b.
The net present value of investment is positive and thus Beyer should accept the investment