a LCU:Home ·Your Account 0 KrightCite Citation S-G Chaplink pps connect. BOM4312

Question

a LCU:Home ·Your Account 0 KrightCite Citation S-G Chaplink pps connect. BOM4312: B1 Fall 2017 ouiz 4·Chapters 13&14 Instructions Question 1 (of 50) Save & Exit S Suppose your firm is considering investing in a project with the cash flows shown as follows, that the required rate of return on projects of this isk ciass is 8 percent, and that the mami allawable paybeck and discounted payback statistic for the project are three and three and a half years, respectively Time Cash Flow -100,000 30,000 45,000 55,000 30,000 10,000 Use the NPV decision rule to evaluate this project should it be accepted or rejected? 0 O$35.995.86, reject O $38.875.53, accept $13887553. accept O $238.875.53, accept

Explanation / Answer

CACULATION OF NET PRESENT VALUE OF THE PROJECT Period Particulars Inflow (Outflow) PVF @8% Present Value 0 Outflow $         -1,00,000.00                         1.0000 $         -1,00,000.00 1 Inflow $               30,000.00                         0.9259 $               27,777.78 2 Inflow $               45,000.00                         0.8573 $               38,580.25 3 Inflow $               55,000.00                         0.7938 $               43,660.77 4 Inflow $               30,000.00                         0.7350 $               22,050.90 5 Inflow $               10,000.00                         0.6806 $                 6,805.83 Total $               38,875.53 NET PRESENT VALUE = $               38,875.53 Answer =Option 2 = $ 38,875.53 ; Accept

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