Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Consider this question: With consideration to the above question, answer the following question: A company is considering a project that will last for 4 years

Consider this question:

image text in transcribed

With consideration to the above question, answer the following question:

image text in transcribed

A company is considering a project that will last for 4 years with no residual value. The project has the following cash flows and details: Period 0: Cash flow = -$165,000 (Cost of project) Period 1: Cash flow = $85,000, Net Income $47,500 Period 2: Cash flow $66,000, Net Income= $28,500 Period 3: Cash flow = $50,000, Net Income $12,500 Period 4: Cash flow = $50,000, Net Income $12,500 Average Book Value $75,000 The required annual return on projects of this risk is 8%. (Round to the nearest dollar and do NOT use commas in your response) What is the net present value of the project? NPV $ A company is considering a project that will last for 4 years with no residual value. The project has the following cash flows and details: Period 0: Cash flow = -$165,000 (Cost of project) Period 1: Cash flow $85,000, Net Income = $47,500 Period 2: Cash flow $66,000, Net Income = $28,500 Period 3: Cash flow $50,000, Net Income $12,500 Period 4: Cash flow $50,000, Net Income $12,500 Average Book Value $75,000 The required annual return on projects of this risk is 8% The company is trying to determine whether or not to accept this project. If they use the net present value (NPV) method of evaluation, will they accept the project? A. Yes, they will accept. OB. No, they won't accept

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_2

Step: 3

blur-text-image_3

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

The Routledge Handbook Of FinTech

Authors: K. Thomas Liaw

1st Edition

0367263599, 978-0367263591

More Books

Students also viewed these Finance questions

Question

What is a host or server?

Answered: 1 week ago