Calculate the net present value of the project.

Question

Net Present Value A project has estimated annual net cash flows of $8,000 for five years and is estimated to cost $28,000. Assume a minimum acceptable rate of return of 12%. Use the Present Value of an Annuity of $1 at Compound Interest table below.

Answer 1

Question

Chapter 26, Problem 3BE

(a)

To determine

Calculate the net present value of the project.

(b)

To determine

Calculate the net present value index, rounded to two decimal places.

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Net Present Value A project has estimated annual net cash flows of $8,000 for five years and is estimated to cost $28,000. Assume a minimum acceptable rate of return of 12%. Use the Present Value of an Annuity of $1 at Compound Interest table below.

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