b. 10.49%. c, 18.73% . 21.60% e. None of the above QUESTION 27 3 points Save Ans

Question

b. 10.49%. c, 18.73% . 21.60% e. None of the above QUESTION 27 3 points Save Answer Joanie's Hoagie Heaven can purchase cooking equipment on sale for $5.600. The asset has a three-year life, will produce a cash flow of $2,300 in the first and second year, and $3 400 in the third year. The cost of capital is 14%. What is the project's NPV? e a $946.21 e b.$482 22 c. $62.81 ed $116.44 e e. None of the above QUESTION 28 3 pointsSave Answer Consider an investment with an initial cost of $15,000 and is expected to last for 5 vears. The expected cash flow

Explanation / Answer

NPV = Present Value of Cash Inflow - Present Value of cash Outflow

= $ 2,300 *1/(1.14) ^ 1 + $ 2,300 *1/(1.14) ^ 1 + $ 3,400 * 1/(1.14) ^ 3 - $ 5,600

= $ 482.22

Hence the correct answer is b. $ 482.22

Note : Since the rate of tax is not given , the depreciation is not taken into consideration.

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