(Present value tables are needed.)The Janus Vending Machine Company is looking to expand its business by adding a new line of vending machines. The management team is considering expanding into either soda machines or snack machines. Following is the relevant financial data relating to the decision: What is the present value of all future cash inflows from the snack machines?

Question

(Present value tables are needed.)The Janus Vending Machine Company is looking to expand its business by adding a new line of vending machines. The management team is considering expanding into either soda machines or snack machines. Following is the relevant financial data relating to the decision:  What is the present value of all future cash inflows from the snack machines?

Quizplus · Accepted Answer

To find the present value of all future cash inflows from the snack machines, we need to use the present value of an annuity table. From the table, we can see that the present value factor for 5 periods at 12% interest rate is 3.605.

So, the present value of cash inflows from the snack machines is:

$29,200 x 3.605 = $104,920

Therefore, the best choice is to expand into snack machines as it has the highest present value of all future cash inflows.

(Present Value Tables Are Needed