Elsie Moving Company is considering purchasing new equipment that costs $726,000
Its management estimates that the equipment will generate cash flows as follows:
Year 1 $202,000
2 202,000
3 264,000
4 264,000
5 160,000
The company's required rate of return is 10%. Using the factors in the table below, calculate the present value of the cash inflows. (Round all calculations to the nearest whole dollar.)
Present value of $1:
6% 7% 8% 9% 10%
1 0.943 0.935 0.926 0.917 0.909
2 0.890 0.873 0.857 0.842 0.826
3 0.840 0.816 0.794 0.772 0.751
4 0.792 0.763 0.735 0.708 0.683
5 0.747 0.713 0.681 0.650 0.621
A) $793,414
B) $797,481
C) $828,406
D) $808,971
C .C)
Cash Inflows PV factors at 10% Present Value
$202,000 0.909 $183,618
202,000 0.826 166,852
264,000 0.751 198,264
264,000 0.683 180,312
160,000 0.621 99,360
$828,406
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