Problem 12-14 (Algo) Net present value method [LO12-4] Aerospace Dynamics will invest $150,000 in a project that will produce the following cash flows. The cost of capital is 11 percent. (Note that the fourth year's cash flow is negative.) Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods. Year 1 2 3 4 5 Cash Flow $ 49,000 60,000 52,000 (60,000) 110,000 a. What is the net present value of the project? Note: Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places. > Answer is complete but not entirely correct. Net present value $ 40,996.33 X b. Should the project be undertaken? yes ✔ no

Problem 12-14 (Algo) Net present value method [LO12-4] Aerospace Dynamics will invest $150,000 in a project that will produce the following cash flows. The cost of capital is 11 percent. (Note that the fourth year's cash flow is negative.) Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods. Year 1 2 3 4 5 Cash Flow $ 49,000 60,000 52,000 (60,000) 110,000 a. What is the net present value of the project? Note: Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places. > Answer is complete but not entirely correct. Net present value $ 40,996.33 X b. Should the project be undertaken? yes ✔ no

Financial And Managerial Accounting

15th Edition

ISBN:9781337902663

Author:WARREN, Carl S.

Publisher:WARREN, Carl S.

Chapter26: Capital Investment Analysis

Section: Chapter Questions

Problem 3CMA

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