Harvey wants to determine the net present value for a proposed capital investmen

Question

Harvey wants to determine the net present value for a proposed capital investment. He has determined the desired rate of return, the expected investment time period, a series of cash inflows of equal amount, the salvage value of the investment, and the required cash outflows. Which of the following tables would most likely be used to calculate the net present value of the investment?

Present value of annuity.

Future value of a lump sum.

Present value of annuity and present value of a lump sum.

Future value of annuity and future value of a lump sum.

Explanation / Answer

Answer is Present value of annuity and present value of Lumpsum.

Explanation:

The Annuity table of present value is used for the equivalent amount of cash flows over a period of time.

And the for other cash flows, like salvage value, investment on different period having different amount shall be computed with the help of present value table for lumpsum amount.

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