Question
Atlantic Industries is evaluating a proposal which has an initial investment of $85,000 and has cash inflows of $22,000 per year for six years. The
Atlantic Industries is evaluating a proposal which has an initial investment of $85,000 and has cash inflows of $22,000 per year for six years. The item can be sold at the end of the project for $4,000. If the firms discount rate is 8%, the net present value of the project is:
Present Value of $1 | ||||||
Periods | 4% | 6% | 8% | 10% | 12% | |
1 | .962 | .943 | .926 | .909 | .893 | |
2 | .925 | .890 | .857 | .826 | .797 | |
3 | .889 | .840 | .794 | .751 | .712 | |
4 | .855 | .792 | .735 | .683 | .636 | |
5 | .822 | .747 | .681 | .621 | .567 | |
6 | .790 | .705 | .630 | .564 | .507 | |
7 | .760 | .665 | .583 | .513 | .452 | |
Present Value of a Series of $1 Cash Flows | ||||||
Periods | 4% | 6% | 8% | 10% | 12% | |
1 | 0.962 | 0.943 | 0.926 | 0.909 | 0.893 | |
2 | 1.886 | 1.833 | 1.783 | 1.736 | 1.690 | |
3 | 2.775 | 2.673 | 2.577 | 2.487 | 2.402 | |
4 | 3.630 | 3.465 | 3.312 | 3.170 | 3.037 | |
5 | 4.452 | 4.212 | 3.993 | 3.791 | 3.605 | |
6 | 5.242 | 4.917 | 4.623 | 4.355 | 4.111 | |
7 | 6.002 | 5.582 | 5.206 | 4.868 | 4.564 |
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