Question
A project requires a $42,000 initial investment and is expected to generate end-of-period annual cash inflows as follows: Year 1 Year 2 Year 3 $
A project requires a $42,000 initial investment and is expected to generate end-of-period annual cash inflows as follows:
| Year 1 | Year 2 | Year 3 |
|---|---|---|
| $ 19,000 | $ 20,000 | $ 19,000 |
Assuming a discount rate of 14%, what is the net present value of this investment?
Selected present value factors for a single sum are shown in the table below.
| i = 14% | i = 14% | i = 14% |
| n = 1 | n = 2 | n = 3 |
| 0.8772 | 0.7695 | 0.6750 |
Step by Step Solution
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There are 3 Steps involved in it
Step: 1
To calculate the net present value NPV of the investment we need to discount each cash inflow to its ...
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Fundamentals of Financial Management
Authors: Eugene F. Brigham, Joel F. Houston
15th edition
1337671002, 978-1337395250
