Assume you are the CFO of a company of your choice. Provide an example of a long-term capital asset that the business would need to operate and/or grow its business. Following the example on page 162 in ACCT2 for Bud and Rose’s Flower Shop, come up with your own example of a net present value analysis.
Williams and Park Accounting Practice is considering investing in a new computer system that costs $9,000 and would reduce processing costs by $2,000 a year for the next six years. Calculate the internal rate of return using the time value of money charts located at the end of the Review Cards for this chapter.
In your personal experience, have you seen a net present value calculation used? Under what circumstances? For what purpose? Explain.