1 . A given project requires a $70,000 investment and is expected to generate en
ID: 2477093 • Letter: 1
Question
1. A given project requires a $70,000 investment and is expected to generate end-of-period annual cash inflows as follows: Year 1 Year 2 Year 3 Total $28,000 $17,500 $24,500 $70,000 Assuming a discount rate of 9%, what is the net present value of this investment? Selected present value factors for a single sum are shown in the table below:
i = 9% i = 9% i = 9% n = 1 n = 2 n = 3 0.91743 0.84168 0.77218
$59,336.0
($10,664)
$51,100
$0
($6,300)
2.
A given project requires a $60,500 investment and is expected to generate end-of-period annual cash inflows of $26,000 for each of three years. Assuming a discount rate of 9%, what is the net present value of this investment? Selected present value factors for a single sum are shown in the table below:
$65,814
$5,314
$6,155
($23,853)
$0
A given project requires a $60,500 investment and is expected to generate end-of-period annual cash inflows of $26,000 for each of three years. Assuming a discount rate of 9%, what is the net present value of this investment? Selected present value factors for a single sum are shown in the table below:
Explanation / Answer
1.
2.
Year Cash Flows PV Factors PV of cash flows 0 $70,000 1 ($70000) 1 $28,000 0.9174 $25687 2 $17,500 0.8417 $14729 3 $24,500 0.7722 $18918 NPV of Cash Flows ($10664)Related Questions
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