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Acc 200P
Name: ________________________
Lab Section #_________________
Chapter 8
Present Value of an Annuity
(n) period
8
%
6
4.6229
Present Value of a Lump Sum
(n) period
8
%
6
0.6302
A. Needham Inc. is evaluating the purchase of a new machine with a cost of $20,000.
The estimated annual cost flows are $6,000 for each of the next six years. The
machine is expected to have a salvage value of $2,000 at the end of the sixth year.
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Unformatted text preview: In addition, the machine will be depreciated annually over a six year life. What is the machine’s net present value if the cost of capital is 8%? Ignore tax effects. Answer: ________________ B. What if the company has a tax rate of 25%. Taking into account income taxes, calculate the new net present value. Answer: ________________...
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This note was uploaded on 01/11/2011 for the course ACC 200 taught by Professor Buckless during the Winter '08 term at N.C. State.
 Winter '08
 Buckless
 Managerial Accounting

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