A COMPANY IS CONSIDERING AN INVESTMENT PROPOSAL THAT WOULD REQUIRE AN OUTLAY OF $800,000, AND WOULD YIELD YEARLY CASH FLOWS OF $200,000 FOR 9 YEARS. tHE COMPANY USES A DISCOUNT RATE OF 10%. WHAT IS THE NPV of this investment?

8% 9% 10%

1 0.936 0.971 0.909

2 1.783 1.759 0.909

3 2.577 2.531 2.487

4 3.312 3.24 3.17

5 3.993 3.89 3.791

6 4.623 4.486 4.355

7 5.206 5.033 4.868

8 5.747 5.535B 5.335

9 6.247 5.995 5.759

ANSWERS

1. 351,800

2. 400,000

3. 250,000

4. 350,000