Maxwell Company Is Deciding Whether to Automate One Phase of Its

question 58

Essay

Maxwell Company is deciding whether to automate one phase of its production process.The equipment has a six year life and will cost $450,000.The interest rate is 12%.Net cash inflows per year: $$\begin{array} { | l | l | } \hline \text { Year 1 } & \$ 80,000 \\\hline \text { Year 2 } & \$ 70,000 \\\hline \text { Year 3 } & \$ 95,000 \\\hline \text { Year 4 } & \$ 75,000 \\\hline \text { Year 5 } & \$ 84,000 \\\hline \text { Year 6 } & \$ 96,000 \\\hline\end{array}$$
a.What is the present value of the net inflow for year 1?
b)What is the present value of the net inflow for year 5?

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Definitions:

SmartArt

A tool in Microsoft Office programs that allows users to create visually appealing diagrams and charts to represent information graphically.

Table Column

A table column is a vertical arrangement of data in a table, where each column contains information about a specific attribute of the entities listed in the rows.

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A horizontal group of cells in a table, typically used to represent a single record or entry of data.

Cut and Paste

The process of moving data or text from one location to another by first removing it from its original location and then inserting it into a new one.