please answer completely and correctly all questions thanks probGuid-QNAP 101 40

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please answer completely and correctly all questions thanks

probGuid-QNAP 101 4006&ck;=m,1 510118221 262-0AAAOS //q5earch Attempts: 4. Net present value method Consider the case of Krause Industries: Keep the Highest: /2 Krause Industries is evaluating a proposed capital budgeting project that will require an initial investment of $140,000. The project is expected to generate the following net cash flows: Year Year 1 Year 2 Year 3 Year 4 Cash Flow $40,600 $51,000 $46,500 $44,400 Assume the desire d rate of return on a project of this type is 9%, what is the net present value of this project? O $4,725.40 O $26,719.70 O $18,304.10 O $7,534.00 ng for funding with Suppose Krause Industries has enough capital to fund the project, and the project s not other projects, Should Krause Industries accept or reject this project? competi O Reject the project Accept the project

Explanation / Answer

1)Present value of cash flow =[PVF9%,1*CF1]+[PVF9%,2*cf2]+...+[PVF9%,4*CF4]

       =[.91743*40600]+[.84168*51000]+[.77218*46500]+[.70843*44400]

       = 37247.66+ 42925.68+ 35906.37+ 31454.29

       = 147534

NPV =Present value - iNitial cost

       =147534-140000

      = 7534

correct option is "D"

2)Since NPV is positive ,project should be accepted.

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