Purchase Solution

Annual cash inflow and NPV

Not what you're looking for?

Ask Custom Question

Smith Services is considering the purchase of on of two new personal computers, P and Q. Both are expected to provide benefits over a 10 year period, and each has a required investment of $3,000. The firm uses a 10% cost of capital. Management has constructed the following table of estimate of annual cash inflows for pessimistic, most likely, and optimistic results.
Determine the range of annual cash inflows for both computers.
Construct a table for the NPVs associated with each outcome for both computers.
Find the rang of NPVs and subjectively compare the risks associated with purchasing these computers.

Attachments
Purchase this Solution

Solution Summary

The solution explains how to calculate the annual cash flow and determine the NPV

Purchase this Solution


Free BrainMass Quizzes
Business Ethics Awareness Strategy

This quiz is designed to assess your current ability for determining the characteristics of ethical behavior. It is essential that leaders, managers, and employees are able to distinguish between positive and negative ethical behavior. The quicker you assess a person's ethical tendency, the awareness empowers you to develop a strategy on how to interact with them.

Writing Business Plans

This quiz will test your understanding of how to write good business plans, the usual components of a good plan, purposes, terms, and writing style tips.

Employee Orientation

Test your knowledge of employee orientation with this fun and informative quiz. This quiz is meant for beginner and advanced students as well as professionals already working in the HR field.

Transformational Leadership

This quiz covers the topic of transformational leadership. Specifically, this quiz covers the theories proposed by James MacGregor Burns and Bernard Bass. Students familiar with transformational leadership should easily be able to answer the questions detailed below.

Paradigms and Frameworks of Management Research

This quiz evaluates your understanding of the paradigm-based and epistimological frameworks of research. It is intended for advanced students.