The following present value factors are provided for use in this problem.
| Periods | Present Value of $1 at 8% | Present Value of an Annuity of $1 at 8% |
| 1 | 0.9259 | 0.9259 |
| 2 | 0.8573 | 1.7833 |
| 3 | 0.7938 | 2.5771 |
| 4 | 0.7350 | 3.3121 |
Xavier Co. wants to purchase a machine for $38,000 with a four-year life and a $1,100 salvage value. Xavier requires an 8% return on investment. The expected year-end net cash flows are $13,000 in each of the four years.
What is the machine’s net present value?
Artie’s Soccer Ball Company is considering a project with the following cash flows:
| Initial outlay | $750,000 |
| Incremental after-tax cash flows from operations Years 1-4 | $250,000 per year |
Compute the NPV of this project if the company’s discount rate is 12%.
Your firm is considering a project that has the following set of cash flows. If the required rate of return for the project is 10%, find the net present value.
| Year | Cash Flow |
| 0 | -$35,000 |
| 1 | 10,000 |
| 2 | 20,000 |
| 3 | 10,000 |
| 4 | 30,000 |
Fitch Minster Armored Car can purchase a new vehicle for $200,000 that will provide annual net cash flow over the next five years of $40,000, $45,000, $50,000, $55,000, and $60,000. The salvage value of the vehicle will be $25,000. Assume that the vehicle is sold at the end of year 5.
Calculate the NPV of the ambulance if the required rate of return is 9%.
