00:01
In the given portion, a machinery is being added at a cost of that means the initial cost of the machine is given to be $4133250.
00:23
So this is the initial cost of the machines.
00:25
And for the six years, the machine is going to have a restricted cash flow and the discount rate given in the question is 15 % and, we need to find out the net present value of the machine.
00:40
So what we will be doing, first of all, we will be calculating the present value of the cash flows with 15 % discount factor.
00:49
And here we have made year column, that is first, second, third, fourth, fourth, fifth and sixth.
00:55
Thereafter, we have mentioned the cash flows in the respective years, like in the first year, the cash flow is of $8122.
01:02
And similarly, up to the sixth year, we have mentioned the cash flows.
01:07
Now here the discount rate is given to be 15 % so what we will be doing we will be finding the present value in the column c that is 1 upon 1 plus discount rate to the power n so for the first year the discount rate is going to be 1 upon 1 plus 0 .5 to the power 1 similarly for the second year this discounting rate is going to be 1 upon 1 plus 0 .15 to the power 2 and for the third year, this is going to be 1 upon 1 plus 0 .15 to the power 3.
01:47
For the 4th year, it is going to be 1 plus 0 .15 to the power 4.
01:54
For 5th year, it is going to be 1 plus 0 .15 to the power 5.
02:01
And lastly, for the 6th year, it is going to be 1 plus 0 .15 to the power 6.
02:08
Now, in order to find the present value of cash flow in the last column, what we will be doing, we will be taking the product of cash inflow and their respective present value factor.
02:20
So for the first year, that is the cash flow of 818822, if multiplied with the present value factor, that is 1 upon 1 plus 0 .15 to the power 1, then it comes to 712 .0 .1...