A project has estimated annual net cash flows of $82,000 for five years and is estimated to

Question:

A project has estimated annual net cash flows of $82,000 for five years and is estimated to cost $259,000. Assume a minimum acceptable rate of return of 12%. Using Exhibit 2, determine

(1) The net present value of the project and

(2) The present value index, rounded to two decimal places.

Net Present Value
What is NPV? The net present value is an important tool for capital budgeting decision to assess that an investment in a project is worthwhile or not? The net present value of a project is calculated before taking up the investment decision at...