Score: 0 of 4 pts 34 of 35 (34 complete) HW Score: 91.66%, 183.31 of 200 pts 26.

Question

Score: 0 of 4 pts 34 of 35 (34 complete) HW Score: 91.66%, 183.31 of 200 pts 26.4-13a Question Help Gamma Corporation is considering an investment of $506,000 in a land development project. The investment will yield cash inflows of $208,000 per year for five years. The company uses a discount rate of 9%. What is the net present value of the investment? Present value of an ordinary annuity of $1 8% 9% 10% 0.917 1.759 0.926 1.783 2.577 2.531 3.312 3.993 0.909 1.736 2.487 3.17 3.791 3.24 3.89 O A. $232,760 OB. $208.000 O C. $333,960 OD, $303.120

Explanation / Answer

Solution: Net present value of the investment is $303120

Working:
= - 506,000 + 208,000 * 3.89
= 303,120

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