the management of hence corporation is considering the purchase of a new machine cos 509126

The management of Hence Corporation is considering the purchase of a new machine costing $200,000. The company’s desired rate of return is 10%. The present value factors for $1 at compound interest of 10% for 1 through 5 years are 0.909, 0.826, 0.751, 0.683, and 0.621, respectively. In addition to the foregoing information, use the following data in determining the acceptability in this situation:

Income from Net Cash
Year Operations Flow
1 $50,000 $90,000
2 30,000 60,000
3 10,000 50,000
4 5,000 45,000
5 5,000 45,000

The average rate of return for this investment is

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