Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

A company is considering a project with the following characteristics: Initial investment: $9,000 Working capital required: $3,000 Annual net cash flows for 4 years: $3,000

A company is considering a project with the following characteristics:

  • Initial investment: $9,000
  • Working capital required: $3,000
  • Annual net cash flows for 4 years: $3,000 per year

The working capital will be released at the end of the 4-year project. The company's discount rate is 8%.

What is the Net Present Value of this project? (Use the present values tables below for any present value calculations. Don't round intermediate calculations. Round your final answer to the nearest dollar.)

Present Value of $1 received in n periods.
Periods 6% 7% 8% 9% 10% 11% 12% 13% 14%
1 0.943 0.935 0.926 0.917 0.909 0.901 0.893 0.885 0.877
2 0.890 0.873 0.857 0.842 0.826 0.812 0.797 0.783 0.769
3 0.840 0.816 0.794 0.772 0.751 0.731 0.712 0.693 0.675
4 0.792 0.763 0.735 0.708 0.683 0.659 0.636 0.613 0.592
5 0.747 0.713 0.681 0.650 0.621 0.593 0.567 0.543 0.519
6 0.705 0.666 0.630 0.596 0.564 0.535 0.507 0.480 0.456
7 0.665 0.623 0.583 0.547 0.513 0.482 0.452 0.425 0.400
8 0.627 0.582 0.540 0.502 0.467 0.434 0.404 0.376 0.351
Present Value of an ordinary annuity of $1 received at the end of the period for n periods.
Periods 6% 7% 8% 9% 10% 11% 12% 13% 14%
1 0.943 0.935 0.926 0.917 0.909 0.901 0.893 0.885 0.877
2 1.833 1.808 1.783 1.759 1.736 1.712 1.690 1.668 1.647
3 2.673 2.624 2.577 2.531 2.487 2.444 2.402 2.361 2.322
4 3.465 3.387 3.312 3.240 3.170 3.102 3.037 2.974 2.914
5 4.212 4.100 3.993 3.890 3.791 3.696 3.605 3.517 3.433
6 4.917 4.767 4.623 4.486 4.355 4.231 4.111 3.998 3.889
7 5.582 5.389 5.206 5.033 4.868 4.712 4.564 4.423 4.288
8 6.210 5.971 5.747 5.535 5.335 5.146 4.968 4.799 4.639

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

More Books

Students also viewed these Accounting questions

Question

2. What efforts are countries making to reverse the brain drain?

Answered: 1 week ago