A company is considering a project that will last for 4 years with no residual value. The project has the following cash flows and details: Period 0: Cash flow = -$165,000 (Cost of project) Period 1: Cash flow = $85,000, Net Income = $47,500 Period 2: Cash flow = $66,000, Net Income = $28,500 Period 3: Cash flow = $50,000 Net Income = $12,500 Period 4: Cash flow = $50,000, Net Income = $12,500 Average Book Value = $82,500 The required annual return on projects of this risk is 16%. What is the net present value of the project? NPV = $ (Round to the nearest dollar and do NOT use commas in your response)
A company is considering a project that will last for 4 years with no residual value. The project has the following cash flows and details: Period 0: Cash flow = -$165,000 (Cost of project) Period 1: Cash flow = $85,000, Net Income = $47,500 Period 2: Cash flow = $66,000, Net Income = $28,500 Period 3: Cash flow = $50,000 Net Income = $12,500 Period 4: Cash flow = $50,000, Net Income = $12,500 Average Book Value = $82,500 The required annual return on projects of this risk is 16%. What is the net present value of the project? NPV = $ (Round to the nearest dollar and do NOT use commas in your response)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter19: Capital Investment
Section: Chapter Questions
Problem 10E: Roberts Company is considering an investment in equipment that is capable of producing more...
Related questions
Question
A company is considering a project that will last for 4 years with no residual value. The project has the following cash flows and details:
Period 0: Cash flow = -$165,000 (Cost of project)
Period 1: Cash flow = $85,000,
Net Income = $47,500
Period 2: Cash flow = $66,000,
Net Income = $28,500
Period 3: Cash flow = $50,000
Net Income = $12,500
Period 4: Cash flow = $50,000,
Net Income = $12,500
Average Book Value = $82,500
The required annual return on projects of this risk is 16%. What is the
NPV = $ (Round to the nearest dollar and do NOT use commas in your response)
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps with 5 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
Cornerstones of Cost Management (Cornerstones Ser…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT
Financial And Managerial Accounting
Accounting
ISBN:
9781337902663
Author:
WARREN, Carl S.
Publisher:
Cengage Learning,
Cornerstones of Cost Management (Cornerstones Ser…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT
Financial And Managerial Accounting
Accounting
ISBN:
9781337902663
Author:
WARREN, Carl S.
Publisher:
Cengage Learning,
Managerial Accounting
Accounting
ISBN:
9781337912020
Author:
Carl Warren, Ph.d. Cma William B. Tayler
Publisher:
South-Western College Pub
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College