Required information The following information applies to the questions displaye

Question

Required information The following information applies to the questions displayed below] Park Co. is considering an investment that requires immediate payment of $28,245 and provides expected cash inflows of $9,300 annually for four years. If Park Co. requires a 7% return on its investments. 1-a. What is the net present value of this investment? (PV of $1. FV of $1. PVA of $1. and FVA of $1) (Use appropriate factor(s) from the tables provided. Round your present value factor to 4 decimals.) Cash Flow Select Chart | Amount | x | PV Factor = Present Value Annual cash flow Net present value 1-b. Based on NPV alone, should Park Co. invest? O Yes O No

Explanation / Answer

Calculate net present value :

1b) Yes, Based on NPV alone park co. should invest

Cash flow Amount * PVF = Present value Annual cash flow 9300 * 3.3872 = 31500.96 Initial investment 28245 * 1 = -28245 Net present value 3255.96

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