i cant finish... help If Quail Company invests $48,000 today, it can expect to r

Question

i cant finish... help

If Quail Company invests $48,000 today, it can expect to receive $11,400 at the end of each year for the next seven years, plus an extra $6,400 at the end of the seventh year. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. Enter negative net present values, if any, as negative values. Round your present value factor to 4 decimals.) what is the net present value of this investment assuming a required 10% return on investments? 00:4300 Chart Values are Based on: 10% Select Chart Amount x PV FactorPresent Value Cash Flow 11,400 ,140 S6,400x x10000 Annual cash flow | Present Value of an Annuity of 1 Residual value Present Value of1 x Present value of cash inflows Immediate cash outflows Net present value 1 of 11 ??. Next > Mc Graw Hill

Explanation / Answer

Since tables are not provided, I am using formulas to calculate the present values

Present value factor

= 1 / (1 + r) ^ n

Where,

r = Rate of interest = 10% or0.10

n = 0 to 7

So, PV factor for year 2 will be

= 1 / (1.10) ^ 2

= 1 / 1.21

= 0.826446

The following table shows the calculations

Calculations Particulars Years 0 1 2 3 4 5 6 7 A Initial cash flow (48000.00) B Annual cash flow 0.00 11400.00 11400.00 11400.00 11400.00 11400.00 11400.00 11400.00 C Terminal cash flow 0.00 0.00 0.00 0.00 0.00 0.00 0.00 6400.00 D = A+B+C Net cash flows (48000.00) 11400.00 11400.00 11400.00 11400.00 11400.00 11400.00 17800.00 E PV Factor 1.000000 0.909091 0.826446 0.751315 0.683013 0.620921 0.564474 0.513158 F = D x E Present values (48000.00) 10363.64 9421.49 8564.99 7786.35 7078.50 6435.00 9134.21 G = Sum F Net present value 10784.19

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