Answered step by step
Verified Expert Solution
Question
1 Approved Answer
A company is considering a 2-year project with the following cash flows: Initial investment: $1300 Cash inflow, year 1: $660 Cash inflow, year 2: $920
A company is considering a 2-year project with the following cash flows:
- Initial investment: $1300
- Cash inflow, year 1: $660
- Cash inflow, year 2: $920
- Salvage value, year 2: $230
The company uses straight-line depreciation to depreciate the initial investment cost. In other words, annual depreciation is (initial investment - salvage value)/2. The company's discount rate is 10%.
What is the Net Present Value of this project?
(Use the present values tables at the beginning of the exam for any present value calculations. Don't round intermediate calculations. Round your final answer to the nearest dollar.)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started