Question
A project requires an initial investment of $500,000 and will return $140,000 each year for six years. Factors: Present Value of $1 Factors: Present Value
A project requires an initial investment of $500,000 and will return $140,000 each year for six years.
| Factors: Present Value of $1 | Factors: Present Value of an Annuity | ||
| (r = 10%) | (r = 10%) | ||
| Year 0 | 1.0000 |
|
|
| Year 1 | 0.9091 | Year 1 | 0.9091 |
| Year 2 | 0.8264 | Year 2 | 1.7355 |
| Year 3 | 0.7513 | Year 3 | 2.4869 |
| Year 4 | 0.6830 | Year 4 | 3.1699 |
| Year 5 | 0.6209 | Year 5 | 3.7908 |
| Year 6 | 0.5645 | Year 6 | 4.3553 |
If taxes are ignored and the required rate of return is 10%, what is the project's net present value (rounded to the nearest dollar)?
| $420,970 |
| $114,803 |
| $109,742 |
| $340,000 |
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Coping With Financial Accounting 1 For Senior Secondary Schools And Undergraduate Studies
Authors: Festus Chukwunwendu Akpotohwo ,Stella Alfred-Jaja Wellington-Igonibo ,Cletus Ogeibiri
1st Edition
3659611034, 978-3659611032
