Net Present Value A project has estimated annual net cash flows of $10,000 for nine years and is estimated to cost $35,000. Assume a minimum acceptable rate of return of 12%. Use the Present Value of an Annuity of $1 at Compound Interest table below.
Net Present Value A project has estimated annual net cash flows of $10,000 for nine years and is estimated to cost $35,000. Assume a minimum acceptable rate of return of 12%. Use the Present Value of an Annuity of $1 at Compound Interest table below.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Net Present Value
A project has estimated annual net cash flows of $10,000 for nine years and is estimated to cost $35,000. Assume a minimum
acceptable rate of return of 12%. Use the Present Value of an Annuity of $1 at Compound Interest table below.
Present Value of an Annuity of $1 at Compound Interest
Year
6%
10%
12%
15%
20%
0.909
0.870
0.833
1.736
1.626
1.528
2.487
2.283
2.106
3.170
2.855
2.589
3.791
3.353
2.991
3.326
3.605
3.837
1
2
3
4
5
6
0.943
7
8
1.833
2.673
3.465
4.212
0.893
1.690
2.402
3.037
3.605
4.917
4.355
5.582
4.860
4.564
6.210
5.335
4.968
6.802
5.759
5.328
10
7.360
6.145
5.650
Determine (1) the net present value of the project and (2) the present value index. If required, use the minus sign to indicate a
negative net present value.
4.111
3.785
4.160
4.487
4.772
5.019
4.031
4.192
Net present value of the project (round to the nearest dollar)
Present value index (rounded to two decimal places)
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