A factory costs $330,000. You forecast that it will produce cash inflows of $105,000 in year 1, $165,000 in year 2, and $270,000 in year 3. The discount rate is 11%. a. What is the value of the factory? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. Value of the factory b. is the factory a good investment? O Yes No

Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 4EB: Assume a company is going to make an investment in a machine of $825,000 and the following are the...
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A factory costs $330,000. You forecast that it will produce cash inflows of $105,000 in year 1, $165,000 in year 2, and $270,000 in year
3. The discount rate is 11%.
a. What is the value of the factory?
Note: Do not round intermediate calculations. Round your answer to 2 decimal places.
Value of the factory
b. Is the factory a good investment?
O Yes
O No
CI
Transcribed Image Text:A factory costs $330,000. You forecast that it will produce cash inflows of $105,000 in year 1, $165,000 in year 2, and $270,000 in year 3. The discount rate is 11%. a. What is the value of the factory? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. Value of the factory b. Is the factory a good investment? O Yes O No CI
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