FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Step 1: Net Present Value
Net present value is the present value of cash flow minus initial investment.
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- Please show complete steps all parts or skip itarrow_forwardProject A requires an original investment of $64,300. The project will yield cash flows of $19,600 per year for seven years. Project B has a calculated net present value of $3,760 over a four-year life. Project A could be sold at the end of four years for a price of $14,000. Below is a table for the present value of $1 at Compound interest. Year 6% 10% 12% 1 0.943 0.909 0.893 2 0.890 0.826 0.797 3 0.840 0.751 0.712 4 0.792 0.683 0.636 5 0.747 0.621 0.567 Below is a table for the present value of an annuity of $1 at compound interest. Year 6% 10% 12% 1 0.943 0.909 0.893 2 1.833 1.736 1.690 3 2.673 2.487 2.402 4 3.465 3.170 3.037 5 4.212 3.791 3.605 Use the tables above. (a) Using the present value tables above, determine the net present value of Project A over a four-year life with salvage value assuming a minimum rate of return of 12%. Round your answer to two decimal places. Enter negative values as negative numbers.$fill in the blank 1 (b) Which…arrow_forwardA company is considering an iron ore extraction project that requires an initial investment of $508,000 and will yield annual cash inflows of $152,000 for four years. The company's discount rate is 9%. What is the NPV of the project? Present value of an ordinary annuity of $1: 8% 9% 10% 1 2 3 4 5 6 7 8 0.926 1.783 2.577 3.312 3.993 4.623 5.206 5.747 OA $101,600 OB. $15,520 OC. $(15,520) OD. $(101,000) 0.917 1.759 2.531 3.24 3.89 4.486 5.033 5.535 0.909 1.736 2.487 3.17 3.791 4.355 4.668 5.335arrow_forward
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